UK inflation unexpectedly rises to 3.6% on food and fuel prices
The annual inflation rate in the UK unexpectedly rose to 3.6% in June from 3.4% in May on higher food and transport costs, in particular fuel where prices fell by less than last year.
The core rate, which excludes volatile food and energy costs, was also higher than expected, climbing to 3.7% from 3.5%, according to the Office for National Statistics.
Richard Heys, acting chief economist at the statistics office, said:
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. Food price inflation has increased for the third consecutive month to its highest annual rate since February of last year. However, it remains well below the peak seen in early 2023.
The Consumer Prices Index (CPI) rose by 3.6% in the 12 months to June 2025, up from 3.4% in the 12 months to May.
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— Office for National Statistics (ONS) (@ONS) July 16, 2025
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UK inflation hotter, but rate cuts still possible, said Chris Beauchamp, chief market analyst at IG.
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Today’s CPI data spells more pressure for consumers thanks to the surge in food prices, but the overall picture doesn’t quite spell the end for any further rate cuts. Core goods and services inflation was broadly contained, and the focus shifts now to the job numbers tomorrow to see if there are further signs of weakness that might keep the Bank of England on course to ease policy in upcoming meetings.
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Last month, the central bank’s monetary policy committee voted six to three to keep rates unchanged at 4.25%, following a quarter-point cut in May. The MPC, which has an inflation target of 2%, has reduced interest rates four times since last summer, but policymakers are divided over how persistent price pressures are.
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