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UK inflation climbed more than expected to 3.6% in June, up from 3.4% in May, marking an 18-month high and surprising economists who had forecast a smaller increase. The data, released by the Office for National Statistics (ONS), indicates the fastest rise in the inflation rate since January 2024.
According to the ONS, the jump was primarily driven by motor fuel and food costs. Notably, food price inflation rose for the third consecutive month, renewing concerns about household spending pressure amid the cost-of-living crisis.
💬 Political Reactions
Chancellor Rachel Reeves responded to the figures by acknowledging that while inflation is far lower than its double-digit peak in 2022, there’s still “more to do” to bring prices down.
Meanwhile, Shadow Chancellor Mel Stride called the latest inflation reading “deeply worrying for families” who are already struggling with high bills and stagnant wages.
🏦 Interest Rate Outlook
Despite the unexpected rise, analysts still expect the Bank of England (BoE) to move forward with interest rate cuts later this year. However, as BBC business correspondent Theo Leggett notes, the latest data may prompt some at the BoE to proceed more cautiously, given persistent price pressures in core areas like food and energy.
The BoE’s next decision could hinge on how inflation behaves in the coming months and whether wage growth and service costs begin to ease.
📊 What This Means for You
Higher inflation means consumers may continue to see elevated grocery and fuel bills, eroding purchasing power. It also complicates efforts to lower mortgage rates, as rate cuts could be delayed to avoid reigniting inflation.
