UK inflation slows in June as energy price pressures ease
Britain's consumer price growth eases in June, offering some relief as the Bank of England weighs its next interest rate decision. Annual inflation slows to 2.6% from 2.8% in May, coming in below economists' median forecast and reflecting softer energy-driven pressure.
Highlights
- UK consumer price inflation slowed to 2.6% in June from 2.8% in May, below economists' median forecast of 2.7%.
- Easing energy prices following a ceasefire in the Iran war drove the inflation slowdown, but the Bank of England expects inflation to rise to 3% in Q3.
- Markets anticipate the BoE will keep rates at 3.75% next week, with one to two rate hikes priced in by end-2026 amid stabilising economic and labour indicators.
June inflation data and rate outlook
As reported by Reuters, official figures released on Wednesday show Britain's annual rate of consumer price inflation slows to 2.6% in June from 2.8% in May.A Reuters poll of economists had pointed to a median forecast of 2.7% for June. The easing comes as a surge in energy prices linked to the Iran war fades during the month, when a ceasefire begins.
Britain remains particularly exposed to swings in energy costs because of its reliance on imported natural gas. Inflation has mostly stayed above the Bank of England's 2% target over the past five years, and the central bank says it is likely to rise to 3% in the third quarter.
Market expectations and pressure on policymakers
Investors expect the BoE to keep its benchmark interest rate at 3.75% next week as it continues to assess the impact of the Middle East conflict. Some policymakers who voted to increase borrowing costs in June are worried about the risk that inflation persistently overshoots the 2% target.Financial markets on Tuesday price in one or possibly two quarter-point interest rate increases by the end of 2026. Separate ONS data last week paints a slightly better picture of Britain's economy in May, while figures released on Tuesday show signs of stabilisation in the labour market in recent months and weaker government borrowing in June.
In our earlier article on the policy traps facing Chancellor John Healey, we explained that markets will judge the new government on whether it maintains fiscal credibility while tackling living costs. We noted that measures such as cutting VAT on electricity or using off-balance-sheet funding for higher defence spending could add complexity and undermine confidence, while attempts to control inflation through subsidies tend to be temporary and costly.
Latest ONS News
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
