The easing in CPI inflation from 2.8% in May to a 14-month low of 2.6% in June is unlikely to last long. The lagged effect from high energy prices will probably lift inflation above 3.0% in September and to about 3.5% around the turn of the year. Even so, as long as the latest rebound in energy prices doesn’t go much further, the weak labour market will probably prevent second-round effects and mean that inflation falls to 2.0% next year.
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