"June is the first month of 2020 where we have seen the impact of lockdown easing on the inflation rate."
The Consumer Prices Index (CPI) 12-month rate was 0.6% in June, up from 0.5% in May.
CPIH inflation - the ONS' headline measure which includes owner occupiers’ housing costs - rose to 0.8% in June, up from 0.7% in May.
The largest contribution to the CPIH 12-month inflation rate in June 2020 came from recreation and culture. Rising prices for games and clothing resulted in the largest upward contributions to the change between May and June.
James Lynch, Investment Manager, Fixed Income at Kames Capital, commented: "June's higher inflation rate was the first rise in inflation of 2020 and surprised forecasters, but there are number of factors to consider here.
"Firstly, the ONS itself still faces issues in collecting the data, with 13.5% of the usual basket not included, and so not reflected as normal.
"Shorter term, as lockdown eases these items will come back in, but we also have the VAT cut and the meal deal for eating out which will add to downward pressure.
"As such over the next six to 12 months, inflation will most likely remain low and will not be the main driver of policy rates or of the bond market."
Debapratim De, senior economist at Deloitte, said: “June’s inflation figures are slightly above expectations but there remains abundant spare capacity in the economy. This should maintain a downward pressure on inflation, which could fall further, especially if there is a spike in unemployment later this year.
“A deflationary environment and elevated uncertainty means interest rates are likely to remain at ultra-low levels well into next year.”
Rachel Winter, associate investment director at Killik & Co, added: “June is the first month of 2020 where we have seen the impact of lockdown easing on the inflation rate. Non-essential shops were starting to open, people began heading back to work and the hospitality industry prepared to reopen. While it still sits well below the government’s 2% target, it does point towards a continued upward trend - even if slight.
“Over the next month or two, without looking too far ahead, we can expect to see increased activity in hospitality, retail and travel. Holidays are being booked and airlines restarting flights, though spending on these trips is far below normal levels. Even with Rishi Sunak’s incentives, lockdown will have undeniably changed the spending attitudes of many and it will be a while before people are as willing to dig deep in their purses. This data is one to watch, as the detail behind the inflation figures tells us more about which sectors are the winners and losers of the Covid-19 fallout.”
