13 July 2004, 13:00  UK inflation rises to 1.6% in June

Britain's inflation rate rose to 1.6 percent in June, its highest level in over a year, as the cost of holidays, computer games and other entertainment products increased, official data showed on Tuesday. The Office for National Statistics (ONS) said that the consumer price index fell by 0.1 percent on the month but the annual rate still rose to 1.6 percent from 1.5 percent in May, in line with economists' expectations. Although the annual figure is well below the Bank of England's 2.0 percent target, it was the highest rate since March 2003 and will add weight to the Bank's view that interest rates may need to rise to keep price pressures in check. Furniture and household equipment also had an upward effect on inflation as retailers offered fewer discount promotions than last year.
Petrol prices fell back slightly after recent rises but by less than prices fell in June last year. The largest downward effect on the CPI annual rate came from miscellaneous goods and services. This was due to financial services and reduced charges for foreign exchange services in particular, the ONS said. Additional downward pressure came from food and non-alcoholic beverages as prices of fruits and meat dropped on the month. The annual rise in the food and beverages component was 0.8 percent, the lowest rate since April last year.///

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