UK inflation plummets - good news, or?

Headline UK June CPI came out at 2.4 percent year-on-year (YOY), versus expectations for 2.8 percent (i.e. unchanged from May), marking the start of what will in all probability be a collapse to 1 percent, or below, over the next six months. Core CPI also fell sharply, from 2.2 percent YOY to 2.1 percent - this metric has actually been expected to increase to 2.5 percent!

To be sure, the dreadful weather that has characterised much of the 'summer' so far, for much of the country, will have contributed to the falls by reducing demand for clothing and 'retail' generally. However, the fall in inflation, although welcome to the hard-pressed consumer who has suffered a huge hit to real disposable income over the last three years, also carries a potentially chilling message - maybe general economic activity is falling off a cliff, possibly in reaction to Eurozone debt crisis worries?

We must await tomorrow's release of unemployment figures for further clues.