Low-priced clothing and electricals drive decline
The Consumer Price Index (CPI) inflation slowed to 2.4 per cent in June driven by lower-priced clothing and electrical goods.

The CPI rate slowed from 2.5 per cent in May, but the dip was smaller than analysts had forecast and this has raised fears that interest rates may have to rise again soon. The Bank of England has already raised interest rates five times this year.

The largest upward movement was in furniture, with prices continuing to rise. Last month, the sector recorded an inflation increase of 12.5 per cent, up from 2.5 per cent in January. However, some of this shift can be attributed to the early Sale period last year, which was driven by the timing of the football World Cup.

Food inflation remains static at 4.8 per cent. However, staple food products continue to rise following poor weather, which has affected crop yields and vegetables.

Retail Knowledge Bank senior partner Robert Clark said that price deflation in the clothing market had slowed. He said: 'There are clear signs that the deflation rate is slowing in clothing and footwear, which is particularly on an upward trend of 2.2 per cent.'

The Office for National Statistics said the Retail Prices Index, an inflation measure often used in pay bargaining, rose to 4.4 per cent from 4.3 per cent in May. Core inflation, which excludes food and energy costs, rose to 2 per cent - the highest level since March 1997.