"Inflation has been below the Bank of England’s target rate of 2% since December 2013. However, a combination of factors may see UK inflation racing back towards target in the coming weeks."
This is higher than economists' forecasts of 0.4% and marks the highest figure since March, which also saw a 0.5% rise.
However Ben Brettell, Senior Economist at Hargreaves Lansdown, highlights that as data was gathered by the ONS prior to the EU referendum, it "doesn’t include the effect of sterling’s dramatic fall since the vote".
With the exception of March, which the ONS says was "when the rate was influenced by the timing of Easter", headline inflation had been 0.3% for all months of 2016.
The data says that although the June rate is a little above the position seen for most of 2016 "it is still relatively low historically".
Rises in air fares, prices for motor fuels and a variety of recreational and cultural goods and services were the main contributors to the increase in the rate.
Ben Brettell added: "Sterling’s weakness means higher import prices, and this is expected to feed through to significantly higher inflation figures in the coming months. Forecasts suggest it could reach 3-4%. However, this will be a temporary factor – assuming sterling remains weak, the effect will fall out of the year-on-year calculation in the second half of next year."
Nick Dixon, Investment Director at Aegon UK, commented: “Inflation has been below the Bank of England’s target rate of 2% since December 2013. However, a combination of factors may see UK inflation racing back towards target in the coming weeks. Sterling has dropped significantly since the Brexit vote and for a net importer like the UK, it is only a matter of time until this filters back into the cost of goods. The question for policymakers is how manageable these prices rise will be and whether or not they will stabilise around target.”
