RECENT hikes in energy costs and petrol prices are expected to send United Kingdom inflation to its highest level in four months when official figures are disclosed on Wednesday.
Ben Brettell, senior economist, Hargreaves Lansdown, said: "There's certainly a case for higher rates as soon as next month". Core inflation also surprised to the downside, slowing to a 15-month low of 1.9 percent.
All eyes are now on inflation data, set to be released tomorrow, and tipped to see an acceleration in the rising cost of living due to higher petrol and energy prices. CPIH, the ONS' favoured measure of inflation was also unchanged, steady at 2.3%.
On a monthly basis, consumer prices remained flat in June versus the expected increase of 0.2 percent.
The surprise figures knocked the pound to its lowest level against the U.S. dollar since September, as traders considered whether it would cause a pause among the Bank of England's rate-setting Monetary Policy Committee (MPC) who are expected to consider raising interest rates from 0.5% to 0.75%.
Faster rising prices would have given the Bank of England (BoE) more of a motivation to increase interest rates next month, but today's inflation data combined with yesterday's lacklustre wage growth figures could force policymakers into a rethink.
'It had been expected to bounce back up to 2.6 per cent or even 2.7 per cent on the back of higher fuel and energy prices.
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But a rainy season downpour flooded the tunnels, trapping them as they took shelter on a shelf of the dark cave. "We'll do whatever he wants", he said.
But some relief emerged for consumers on the high street, where clothing discounts - most strongly felt in men's apparel - left more cash in shoppers' wallets.
Tom Stevenson, investment director for personal investing at Fidelity International, said it looks odds-on that the BoE will hold fire yet again on a rate rise.
The ONS said that the price of clothing and footwear fell by 2.3% between May and June compared to a 1.1% decline in the same period a year ago.
Without the increased price of fuel, the ONS said, it is likely that the UK's headline rate of inflation would have dropped in the month, continuing a steady decline witnessed throughout 2018.
The inflation data were significantly below economists' expectations of 2.6 per cent, with deflation in clothes and games, toys and hobbies pulling back the overall level. Pay growth, excluding bonuses, has slowed to 2.7 percent.
The Retail Prices Index, a separate measure of inflation, was 3.4 per cent last month, up from 3.3 per cent in May. The ONS also said house prices in May rose by 3.0 percent annually across the United Kingdom as a whole, the weakest rise since August 2013 and compared with 3.5 percent in April.