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UK inflation rate drops to 0%


The UK inflation rate dropped to 0% in June, down from 0.1% in May, due to a fall in clothing and food prices, as well as a slight reduction in air travel.

The 0% Consumer Price Index (CPI) figure sees the UK hover just above falling into deflation, as prices remain unchanged from the same month last year, according to the Office of National Statistics (ONS). The drop in food, clothing and air travel led to a month on month fall.

Core inflation also dropped to 0.8% staying at the 14 year low it fell to in April.

Bank of England governor Mark Carney has said he expects inflation to remain low in the immediate short term. The rate is expected to pick up at the end of the year.

Philip Gooding from the ONS said:
"Inflation has continued its pattern of recent months, when prices have been very little changed on the previous year.

"The headline rate for June has dropped very slightly on May, back to zero, thanks to small downwards effects from movements in clothing and food prices and air fares."

The figures are good for new households when coupled with improving earnings growth and higher employment, according to Howard Archer, chief UK economist at Global Insight. He said:
"With earnings growth currently seeing clear improvement and employment high and rising, purchasing power is currently in rude heath."

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