Inflation surges to 2.5% in three-year high - and prices will keep rising

The UK rate of inflation surged higher to 2.5% in June - its highest rate in nearly three years, according to latest statistics.

This is up from the 2.1% recorded in May, and above the Bank of England’s (BoE) target of keeping inflation at 2% for the second month in a row.

But prices are expected to keep rising, as the BoE is predicting inflation will reach 3% before the end of this year.

However, it says the increase will be temporary as the UK continues to recover from the coronavirus pandemic.

The Consumer Prices Inflation (CPI) measure of inflation is the rate at which the prices of goods and services bought rise or fall.

Higher fuel costs pushed inflation higher in June (Getty Images)

The Office for National Statistics (ONS) - which publishes the latest Consumer Prices Index measure of inflation - says inflation in the year to June was pushed up by higher food and fuel costs.

Eating and drinking out was also more expensive, while clothing and footwear went up in price as well.

Second-hand car prices rose between May and June this year, despite usually marking a fall in price during these months in previous years.

The ONS said delays in the production of new cars, fuelled by a shortage of chips used in their production, has led to more people choosing a second-hand car.

The rate of inflation in June was above most economists' forecasts of an increase of about 2.2%.

It is also at its highest rate since August 2018 when a figure of 2.4% was recorded.

ONS deputy national statistician for economic statistics Jonathan Athow said: "Inflation rose for the fourth consecutive month to its highest rate for almost three years.

"The rise was widespread, for example coming from price increases for food and for second-hand cars where there are reports of increased demand.

"Some of the increase is from temporary effects, for example, rising fuel prices which continue to increase inflation, but much of this is due to prices recovering from lows earlier in the pandemic.

"An increase in prices for clothing and footwear, compared with the normal seasonal pattern of summer sales, also added to the upward pressure this month."