UK inflation hits 2.9% in June Inflation in the UK rose to 2.9 per cent in June, the highest in more than a year, but nonetheless low enough to spare the Bank of England's new governor from having to write an open letter to the chancellor. The rise in the annual inflation rate from 2.7 per cent to 2.9 per cent, as measured by the consumer price index, was propelled by clothing and footwear prices as well as transport prices. Economists had warned inflation could push above 3 per cent in June, which would have presented Mark Carney the unpleasant task of writing to George Osborne to explain why the rate had climbed so far above the BoE's 2 per cent target. "June's small rise in UK CPI inflation . . . will be greeted with some relief on Threadneedle Street," said Samuel Tombs, an economist at Capital Economics. [And] with leading indicators pointing to a fall in core inflation in the second half of this year, we think that CPI inflation is likely to fall back to the 2 per cent target by the end of the year. Although economists disagree about whether inflation has now peaked, most expect it to retreat later this year. The retail price index inflation rate, which is no longer classified as an "official statistic" but still matters for the £300bn index-linked gilt market, rose from 3.1 per cent to 3.3 per cent. There were two main factors behind the rise in CPI inflation. While the price of clothes and shoes always fall between May and June as retailers start their sales, the drop was much smaller this year than a year ago, when retailers were panicking about lack of demand. These prices fell 1.9 per cent between May and June this year and 4.2 per cent over the same period last year. In addition, fuel prices rose by 1 pence per litre between May and June this year, while they fell by 4.3 pence a litre over the same period last year.