REUTERS

LONDON CONSUMER price inflation unexpectedly eased in June as retailers offered discounts on a number of electronic goods, the Office for National Statistics said on Tuesday.

Consumer prices fell 0.1 percent last month, the first June decline in the index since 2003, taking the annual inflation rate to 4.2 percent, the Office for National Statistics said on Tuesday.

Analysts had expected the annual rate to hold steady at 4.5 percent, a rate hit in April for the first time since October 2008.

The ONS said that there were price reductions on computer games, consoles and other electronics, while food prices continued to rise.

Core inflation, which strips out volatile energy and food prices, slowed to 2.8 percent from 3.3 percent, its lowest since November 2010.

The retail price inflation gauge, which includes more housing costs and is the benchmark for many wage deals, slowed to 5.0 percent, versus a forecast rise of 5.2 percent.

Inflation has been above the Bank of England’s 2 percent target for 1-1/2 years and policy makers expect the annual rate to exceed hit five percent later this year.

Utility companies have cranked up prices for heating and energy.

The figures are likely to bring some reassurance to Bank Governor Mervyn King, who has said repeatedly that the factors behind soaring prices are likely to be temporary, and warned on Monday that attempts to bring inflation down quickly may harm the economy.

The Bank is therefore widely expected to keep interest rates at a record low of 0.5 percent for at least the rest of the year, as concerns are mounting that the economic recovery is faltering.

Separately, the ONS said Britain’s goods trade deficit with the rest of the world widened unexpectedly in May to 8.5 billion pounds, casting doubt about the scale of net trade’s contribution to second-quarter GDP data due later this month.