The Office of National Statistics has released the latest inflation figures for June, and the good news is that the Consumer Prices Index (CPI) has remained steady at 2.0%.

The largest upward contribution to inflation came from restaurants and hotels, where hotel prices, in particular, have increased compared to a year ago. Taylor Swift’s Eras tour in the UK may have played a role in this.

The largest downward contribution came from clothing and footwear, as the prices of garments have fallen since last year.

Attention now turns to the potential impact on interest rate policy. The Bank of England is set to meet on 1st August to discuss this. While it is encouraging that the headline inflation rate has stayed at 2%, economists are concerned that underlying inflationary pressures, including service inflation, persist, making a rate cut less likely. According to Bloomberg, the financial markets reduced the likelihood of a rate cut in August to 25% from 50% after the news of the unchanged inflation figures was released.

Anecdotally, we have noticed that many clients in the services sector are under pressure to find new work, with some regular customers looking to cut costs and reduce spending. Collecting payments is also becoming an issue for some.

As experienced business advisers, we can help you and your business with renegotiating finance, maximising the intelligence from your financial information, or providing tax advice to minimise your tax burden. Why not give us a call and see what we can do for you?

See: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest