UK inflation rose unexpectedly in June to 3.6%, its highest level since January 2024, driven by increased costs for food, clothing, and travel, according to new data released by the Office for National Statistics (ONS).
The jump surprised economists who had forecast inflation to remain steady at 3.4%, the rate recorded in both April and May. The figures raise questions about the timing of an anticipated interest rate cut by the Bank of England, which targets a 2% inflation rate.
ONS acting chief economist Richard Heys said the transport sector made the largest contribution to the higher inflation rate. While petrol and diesel prices are lower than a year ago, the drop between May and June was less pronounced than during the same period in 2023. Airfares, especially on long-haul and European routes, were also significantly higher, and international rail tickets saw price hikes.
Food prices rose 4.5% in the year to June — the highest rate since February. Industry sources say increased costs for ingredients like coffee, butter, chocolate, and meat, along with energy and labour pressures, are behind the continued upward trend.
Although wages have risen by an average of 5.2% over the past year, the impact of inflation remains acute for many households. Low-income earners, in particular, are struggling to cope with daily expenses.
“I eat sweetcorn and pasta,” said Alissia Mardlin, a bartender in London, who described her rent as “extortionate.” ONS figures show private rents rose 6.7% in the year to May, while house prices increased by 3.9%.
Other Britons, like marketing manager Jonathan Ballantyne, say they are adjusting their habits to manage costs. “I’m more conscious of not driving places because I’m thinking about what it’s going to cost,” he said.
Saul, a London resident, noted price hikes on small luxuries like beer and coffee, adding: “Groceries add up massively — meal deals have increased by 50p since I can remember.”
The inflation uptick follows news that the UK economy unexpectedly contracted in May. Chancellor Rachel Reeves acknowledged the ongoing cost-of-living pressures but said the government is committed to boosting economic growth and putting “more money into people’s pockets.”
In her Mansion House speech on Tuesday, Reeves also urged the financial sector to encourage saving and investment. However, personal finance experts warn that rising inflation outpaces returns on most savings accounts. “Shop around for better rates,” advised Caitlyn Eastell of Moneyfactscompare.co.uk.
While a rate cut is still expected in August, some analysts are urging caution. Former Bank of England policymaker Andrew Sentance called it “irresponsible” to lower borrowing costs amid rising inflation.
Despite the June spike, inflation remains far below its October 2022 peak of 11.1%, which was driven by surging energy prices following Russia’s invasion of Ukraine.
