Burnham Faces Bumpy Inflation Path Ahead of Energy Price Hike
UK inflation is expected to have eased slightly in June, giving new Prime Minister Andy Burnham some temporary relief ahead of the household energy price cap hike. The Consumer Prices Index (CPI) will be published on Wednesday, showing an anticipated drop from 2.8% in May to 2.7%. Economists attribute this decrease to a sharp drop in petrol and diesel prices, driven by news of an interim ceasefire deal between the US and Iran.
The RAC reported that diesel prices fell by over 16p per litre at UK forecourts from the start to end of June, the largest decline since records began in 2000. Despite this temporary reprieve, household energy inflation is expected to have taken a step down last month, but economists view it as short-lived relief before Ofgem's new energy price cap took effect on July 1.
The latest cap increased by 13% compared to the previous rates, resulting in a typical household's gas and electricity bill increasing by £221 to £1,862 per year. However, tensions in the Middle East have flared again, causing Brent crude oil prices to rise during July.