UK inflation rose unexpectedly in June, reaching its highest level in a year and a half, according to data released on Wednesday. The development has intensified pressure on the British government and highlighted growing economic challenges.
Figures from the Office for National Statistics (ONS) showed the Consumer Prices Index (CPI) climbed to 3.6% in June, up from 3.4% in May. This marks the highest inflation rate since January 2024, driven largely by persistent increases in fuel and food costs. Most economists had anticipated inflation would remain steady, making the rise a surprise.
The news comes on the heels of other troubling economic indicators, including data showing that the UK economy contracted unexpectedly for a second consecutive month in May. The economic slump, coupled with concerns over new U.S. tariffs, has added to the political and financial pressures facing Prime Minister Keir Starmer’s administration.
Food inflation increases
“Inflation ticked up in June, driven mainly by motor fuel prices, which fell only slightly, compared with a much larger decrease at this time last year,” said Richard Heys, acting chief economist at the ONS. “Food price inflation has increased for the third month to its highest annual rate since February 2024,” he noted.
In response to the latest figures, Chancellor Rachel Reeves acknowledged the continued strain on households, saying, “There is more to do” to assist those “struggling with the cost of living.”
Despite the uptick in inflation, some analysts believe the Bank of England may still proceed with a rate cut in August to support the flagging economy.
“The unexpected rise in CPI inflation… may not prevent the Bank of England from cutting interest rates by 25 basis points in August,” said Ruth Gregory, deputy chief UK economist at Capital Economics. “But it will add to the pressure on the Bank to continue to cut rates at a gradual pace,” she added.
