British inflation fell unexpectedly in June, while the trade gap widened, pointing to more weakness in the economy and providing support to those in the Bank of England who want to keep interest rates at a record low.

A raft of real economy evidence showed Britain struggling to grow in the second quarter, with house prices sliding and retail sales showing a sluggish annual rise in June.

The office for national statistics said that consumer price inflation fell to 4.2 per cent in June from a 2.5 year high of 4.5 per cent in May, after the first drop in prices for a month of June since 2003.

Sterling fell and gilt futures extended gains after the inflation and trade numbers were revealed. – (Reuters)