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Economic Report: U.K. inflation hits fresh 40-year high of 9.4%

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Inflation in the U.K. hit a fresh 40-year high of of 9.4% in June, driven by surging gas and food prices, according to the Office for National Statistics.

Economists has expected a rate of 9.3%, up from 9.1% in May.

The report will put more pressure on the government to address the country’s cost of living crisis, a challenge made all the more difficult because the ruling Conservative party is undertaking a bruising leadership election.

Bank of England governor Andrew Bailey said on Tuesday that price pressures meant a 50 basis point increase in interest rates was possible at its next meeting.

The pound
GBPUSD,
+0.24%

was virtually steady, trading over $1.20, while the 2-year gilt
TMBMKGB-02Y,
1.958%

fell 7 basis points to 1.97%.

Ellie Henderson, an economist at Investec Securities, noted the core reading of inflation fell for the second month in a row, raising the possibility that measure of prices has peaked. “The details of the report lend support to this view, hinting at some unclogging of supply chains,” said Henderson.

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