UK inflation hits highest for almost a year and a half
Getty ImagesPrices rose by more than expected to 3.6% in the year to June, the steepest rise in inflation since January 2024, the Office for National Statistics (ONS) said.
That marks a rise from the 3.4% rate in May, boosted by higher food prices and a lower drop in fuel prices than this time last year.
The rate at which prices increase matters to shoppers, whose money doesn’t go as far if goods and services are becoming rapidly more expensive.
Inflation remains much higher than the Bank of England’s target rate of 2%, but a cut in the cost of borrowing is still expected at next month’s rate-setting meeting.
The pace of price rises affects whether the Bank decides to raise or lower interest rates as higher rates can slow inflation by dampening economic activity.
The faster pace of price rises for June was unexpected, with economists having predicted the inflation rate would stay at 3.4%.
Richard Heys, acting chief economist for the ONS, the UK’s official statistics authority, said one of the main drivers was that fuel prices fell only slightly between May and June this year, compared to a larger fall in the same period last year.
Average wages have risen over the past year, by 5.2%, suggesting many people will not be worse off.
However, shoppers are more affected by rising prices for daily staples such as food and petrol.
Food prices rose at a rate of 4.5% – the highest rate since February 2024 but well below the peak seen two years ago.
Food industry representatives said food price rises were due to manufacturers facing higher costs for key ingredients – such as chocolate, butter, coffee and meat – as well as higher energy and labour costs.
Chancellor Rachel Reeves said she knew people were “still struggling with the cost of living” but said the government’s plans included putting “more money into people’s pockets”.
