The Pound continued to languish around the 1.30 level against the US Dollar yesterday, with investors dialling back bets on a Bank of England interest rate hike following Wednesday's soft inflation print.
Ruth Gregory, senior United Kingdom economist at Capital Economics, said: "While the lower-than-expected rate of inflation in June means that a hike in interest rates in August is a little less clear cut, we nonetheless think that it remains more likely than not".
However, although the price of gas and electricity increased, and petrol prices rose to their highest level since September 2014, the cost of clothing and computer games fell.
Vegetables - including potatoes - also fell 0.9 per cent month on month.
Suren Thiru, head of economics at the British Chambers of Commerce, said the case for a rate rise now looks "very weak", although added that recent hawkish rhetoric means an August hike is very much on the table. While the WPI is no longer the primary focus in the Reserve Bank of India's inflation-targeting approach to monetary policy formulation - having ceded that role to the Consumer Price Index - the gauge remains economically significant nevertheless.
He noted that 10 of the 12 largest energy suppliers - including British Gas, Scottish Power, EDF Energy - have announced price rises which will kick in over the summer.
'Faster rising prices would have given the Bank of England cover for an interest rate hike next month.
But some relief emerged for consumers on the high street, where clothing discounts, most strongly felt in men's apparel, left more cash in shoppers' wallets.
There was also a drop in the prices of games, toys and hobbies, particularly in the cost of computer games, sending prices for recreation and culture down 0.4% overall.
The last time CPI was higher was in February, when inflation was 2.7 per cent.
On a related note, the latest price data released by the commerce and industry ministry shows the Wholesale Price Index (WPI) witnessing a growth of 4.43 percent in May and 0.90 percent in June 2017 primarily driven by some food items and fuel prices.
The U.S. dollar index, which measures the greenback's strength against a basket of six major currencies, was up 0.34% to 95.04, within close reach of the eleven-month high of 95.25 reached in late June. The worst-performing region was London, where prices fell 0.4 percent as Brexit fears and stretched affordability sapped demand.
House prices rose 3 percent in May from a year earlier, the slowest rate since August 2013.