The June Consumer Price Index shows little change in inflation. The overall inflation rate remained at +2.7%, the level recorded in June, while our measure of core inflation, excluding energy products and mortgage interests, fell slightly to +0.5%.
Our conclusion from May remains valid.
The measure of core inflation used here accounts for around 85% of the total index so those who are suffering from rising prices are:
- those with standard rate mortgages with mortgage interest in the CPI (weighting 6.66%) up 24.1% on the year (we can also expect a further increase in ECB linked tracker mortgages over the coming weeks), and
- those who purchase a lot of fuel with energy prices in the CPI (weighting 7.77%) up 11.6% on the year. These are particularly drivers, as petrol and diesel make up about 50% of the energy subgroup and are up 13.8% on the year. See here. The other half of the energy sub-group (electricity, gas, liquid and solid fuels) is also rising up 6.8% on the year.
So somebody who has a standard variable rate mortgage and drives a lot is facing significant price increases compared to 12 months ago. Outside of these particular cases the average inflation rate is quite low with the other 85% of the index rising only 0.5% on the year.