UK inflation unexpectedly rose to an 18-month high in June, intensifying pressure on the government and raising concerns over the country’s economic outlook. The Consumer Prices Index climbed to 3.6% last month, up from 3.4% in May, driven by persistently high motor fuel and food prices, according to data released Wednesday by the Office for National Statistics (ONS). The June figure marks the highest inflation rate since January 2024 and defied analysts’ expectations of no change.
The inflation surge follows recent data showing the UK economy contracted for a second consecutive month in May, adding to challenges facing Prime Minister Keir Starmer’s government amid economic headwinds and trade uncertainty due to US tariffs.
“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, ONS acting chief economist. “Food price inflation has increased for the third month, reaching its highest annual rate since February 2024.”
In response, Finance Minister Rachel Reeves acknowledged the continued cost-of-living challenges facing Britons, stating, “There is more to do” to support households.
Despite the uptick in inflation, some analysts believe the Bank of England could still proceed with an interest rate cut next month to support the struggling economy. Ruth Gregory, deputy chief UK economist at Capital Economics, noted that while the rise in CPI inflation may complicate the Bank’s decision, it is unlikely to derail a potential 25-basis-point rate cut in August.
“But it will add to the pressure on the Bank to continue to cut rates at a gradual pace,” Gregory added.
