By Claire West

UK inflation fell to 3.2% in June from 3.4% in May, a second monthy fall. But the year on year rise in the Consumer Prices Index (CPI) is still far above the Bank of England's 2% target, according to the Office for National Statistics.

The CPI figure was above the expected 3.1%, while the Retail Prices Index (RPI) inflation fell from 5% to 5.1% in May. The RPI includes housing costs, and used to be employed for the Bank's inflation target. It is widely used in salary negotiations.

Ross Walker, UK economist at RBS, said: 'The obvious surprise was the rise in the core rate, which serves to underline this theme of price stickiness. Clearly it's not falling as much as we'd hoped and it's not making the BoE's job any easier'.

The price of clothes and fuel prices helped weight the inflation rate down, but the core inflation rate rose. Inflation in the cost of services also rose to 3.9% from 3.4% in May.


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