Closing summary
Diageo, which owns the Guinness and Johnnie Walker brands, is to replace its embattled chief executive, ending her rocky tenure in charge of the British alcoholic drinks firm.
In a statement to the stock market, Diageo said it had begun the hunt for a successor to Debra Crew, who the company said had stepped down “by mutual agreement”.
Her departure follows a lengthy period of investor disquiet about the company’s lacklustre market performance under the former captain in US military intelligence.
The London-based company’s chief financial officer, Nik Jhangiani, will lead the business on an interim basis.
UK inflation unexpectedly rose in June driven by fuel and food prices, according to official figures, underscoring the challenge facing the chancellor, Rachel Reeves.
The Office for National Statistics said the consumer prices index rose by 3.6% last month. City economists and the Bank of England had forecast it would remain the same as May’s reading of 3.4%.
The increase was largely caused by by petrol and diesel prices falling only slightly in June compared with a much larger decrease a year earlier, alongside food price inflation rising for a third consecutive month to the highest rate in more than a year.
Driving the headline rate further away from the Bank’s 2% target, the rise was announced as Labour faces intense scrutiny over its economic management after two months of negative growth and with speculation mounting over tax rises.
Our other main stories:
Thank you for reading. We’ll be back tomorrow. Take care – JK
Here’s our full story on Barclays:
Barclays has been fined £42m over “poor handling” of financial crime risks linked to two clients, including a gold bullion business run by James Stunt, the former son-in-law of Formula One tycoon Bernie Ecclestone.
The Financial Conduct Authority (FCA) said the bulk of the penalties, about £39.3m, related to Barclays’ failure to properly screen Stunt’s business – Stunt & Co – and its relationship with Fowler Oldfield, a Bradford jeweller now infamously linked to a large money-laundering operation.
The failures spanned 2015 to 2021, and Stunt & Co ultimately received £46.8m from Fowler Oldfield.
Barclays was made aware of the fact that Fowler Oldfield was the subject of a criminal investigation involving potential money laundering in August 2016. But the bank only started to review of its exposure to the company four years later, when the FCA fined NatWest more than £264m over its relationship the purported jeweller.
Co-op boss admits all 6.5m members had data stolen in cyber-attack
Over here, the chief executive of the Co-op has apologised to its customers after admitting that all 6.5 million of the mutual’s members had their data stolen in a recent cyber-attack.
Shirine Khoury-Haq told the BBC she was “incredibly sorry” for the attack in which names and addresses and contact information was obtained by hackers.
She said no financial information, such as credit or debit card details, or transaction data was stolen in the hack, which occurred in April.
We know a lot of that information is out there anyway, but people will be worried and all members should be concerned.
Previously, the company had only said that a “significant number” of its customers’ data had been accessed by the hackers, but did not give a precise figure.
US industrial production rises moderately
There’s more US data: industrial production rose moderately last month after a flat outcome in both April and May, following revisions to official data.
Industrial production rose by 0.3% in June from the previous month, while manufacturing edged up by 0.1%, boosted by a 3.1% gain in primary metals production.
“This presumably reflects the boost from the imposition of even higher 50% tariffs on steel and aluminum imports at the start of the month, although if fabricated metal production is anything to go by, the boost could prove short lived,” said Harry Chambers, assistant economist at Capital Economics.
The small rise in both industrial production and manufacturing output in June suggest that reciprocal tariffs are neither providing a boost nor suppressing domestic production.
It is also unclear whether tariffs are bolstering or dampening motor vehicle production, which fell by 2.6% last month, partially reversing a 4.6% rise in May. Otherwise, mining output fell by 0.3% m/m, while, as expected, there was a substantial rise in utilities output, which still appears to be normalising after it dropped sharply in March.
Wall Street has opened higher, with all main indices rising after producer prices stayed flat in June and as investors digested a raft of corporate results.
The Dow Jones industrial average rose by more than 150 points at the opening bell, or 0.36%, while the S&P 500 gained 17 points, or 0.3%, and the tech-heavy Nasdaq rose by 50 points, or 0.2%.
Liberty Steel is expected to be able to pay its workers for July, after it gained more time today to try to avoid being wound up over unpaid debts.
The company said that its subsidiary, Speciality Steel UK, would use the month until the next hearing on 20 August to try to find a sale. Its creditor, Greensill Capital, applied todayto take over a winding up petition, after another creditor had its debt paid.
Liberty, part of metals tycooon Sanjeev Gupta’s GFG Alliance, operates other steel and aluminium businesses in Hartlepool, Scotland, and Wales, but they are not affected by the insolvency proceedings.
A Liberty Steel spokesperson said:
Today’s resolutions and adjournment provides additional time to finalise options for SSUK while continuing our broader debt restructuring efforts.
We remain committed to identifying a solution that preserves electric arc furnace (EAF) steelmaking in the UK—a critical national capability supporting strategic supply chains.
SSUK has been engaged in complex debt restructuring since the collapse of Greensill Capital in 2021, which significantly constrained its access to capital.Throughout Liberty’s ownership, the shareholder has consistently supported the business, contributing nearly £200m in loss funding and payroll over the past four years—even during periods when significant portions of the business remained non-operational.
US producer prices flat in June, witwh some signs of tariff effects
US producer prices were flat in June, according to official figures, with some signs of tariff effects.
This brings better news for those worried about inflationary pressures, following a 0.3% gain in May that came after a 0.3% drop in April.
US producer prices remained largely unchanged in June. This follows a 0.3% gain in May that offset a 0.3% decline in April. In June, a 0.3% advance in prices for goods offset a 0.1% decrease in services prices. Half of the rise in goods prices were seen in food and energy prices. pic.twitter.com/hZFeMVtRe6
— Dr Thomas Kevin Swift (@DrTKSwift) July 16, 2025
Bradley Saunders, North America economist at Capital Economics, has crunched the numbers.
While prices are rising at slower pace than we had expected earlier in the year, President Trump’s recent aggression on trade suggests the story is far from over.
Both final demand PPI and core final demand PPI were flat in June, thanks largely to a 2.7% drop in airline passenger services prices, as weak demand continued to weigh on prices. Automobile retailing trade services prices fell by 5.4%, indicating that dealers are absorbing some of the 25% tariff hit – although those margins rose by more than 10% cumulatively across March and April, so this is only a partial reversal.
These falls helped to offset a 0.3% rise in core goods prices, within which there were some signs of tariff effects – namely in furniture (1.0%) and home electronics (0.8%) prices. Beyond this, tariff impacts appear limited: while iron and steel scrap prices rose 4.3%, this was a reversal of May’s large fall. Similarly, despite the doubling in tariffs on steel imports to 50%, steel mill product prices fell 5.5% last month.
Taken together, June’s CPI and PPI data point to both the core and headline PCE [personal consumption expenditures] deflator rising by 0.27% m/m last month. This would take the three-month annualised core PCE inflation rate back up to 2.3% which, while a reversal of its recent downward trend, is arguably better than could have been hoped for when President Trump first started threatening large reciprocal tariffs earlier this year. That said, with firms’ pre-tariff inventory stockpiles likely running low and reciprocal tariffs set to rise markedly on 1 August, we are not out of the woods yet.
Updated
UK inflation rise makes it clear: the cost of living crisis has not gone away
Here’s our analysis of the surprise rise in UK inflation to 3.6% last month, by our economics editor Heather Stewart:
For anyone hoping the Bank of England will pick up the pace of interest rate cuts – including Rachel Reeves – there was little comfort in the inflation data.
The consumer prices index increased at a higher than expected rate of 3.6% in June, the Office for National Statistics (ONS) revealed.
That remains in line with the Bank of England’s expectation of an inflation “hump” over the summer; but the upward pressure is not just confined to the regulated prices, such as transport fares and utility bills, that policymakers knew would rise.
Motor fuels are the main factor behind the upward shift in CPI from 3.4% in May, according to the ONS. The price of a litre of petrol is not rising – it fell by 0.5p between May and June. But it was plunging this time last year, so the smaller monthly decline puts upward pressure on inflation.
Diageo CEO steps down after tough two years
Shares in Diageo, which owns the Guinness and Johnnie Walker brands, rose by 3.5% today, making it the top riser on the FTSE 100 index, after its embattled chief executive stepped down.
Debra Crew has quit with immediate effect, “by mutual agreement,” the drinks giant said. Her departure comes after investor disquiet about the company’s lacklustre market performance under the former captain in US military intelligence.
Until a permanent successor is found, Nik Jhangiani, chief financial officer, will assume the role of chief executive on an interim basis.
Crew took command of the £43bn British company in 2023 after the sudden illness and death of Ivan Menezes – a charming and popular figure who had led Diageo successfully for 10 years.
While she had been groomed for the job, Crew’s tenure has been marked by a shock profits warning, adverse global consumer trends and investor disatisfaction.
The profits warning came in November 2023, less than six months into Crew’s tenure, the result of a slump in sales in Latin America and the Caribbean.
This was a shock to investors after a huge post-pandemic rebound in sales but the slump also appeared to have surprised Diageo’s management.
Diageo had continued to plough supply into Latin America, even as drinkers reined in spending, leaving the region massively overstocked.
In the run-up to Christmas last year, Diageo appeared to have misjudged its supply chain again, with UK pubs complaining that their flow of Guinness had been rationed, just as festive demand increased.
The company’s share price has also come under pressure as a result of US president Donald Trump’s tariff wars.
Updated
Liberty Steel's UK business granted another month before potential winding up
Liberty Steel’s key British operations have been granted another month before a potential winding up, amid concern over the future for 1,450 workers in Yorkshire.
A creditor to Speciality Steel UK, which runs an electric arc furnace at Rotherham and another plant near Sheffield in South Yorkshire, had sought to wind up the company over unpaid debts, but a representative told London’s high court today that its debt had been satisfied. A judge ordered the company return to the high court on 20 August in relation to £5m of further debts.
Liberty Steel, owned by metals tycoon Sanjeev Gupta, has been under pressure since the 2021 collapse of Greensill Capital, which had lent Gupta’s GFG Alliance about $5bn (£3.7bn). Since then, Gupta has been scrambling to secure the future of steel and aluminium assets in the UK, Australia and Eastern Europe.
At the court today, administrators for Greensill Capital applied to take the place of the original claimant. The Greensill administrators are seeking repayment of “a little over £5m”, a barrister said.
Speciality Steel UK has not produced any steel for a year because of a lack of money to buy raw materials. However, the company has insisted for months that it was close to securing emergency funding from an unnamed investor.
The collapse of the company would raise questions over possible intervention by the Labour government. The Guardian last week revealed that government officials have considered taking action to preserve the operations at Speciality Steel if it falls into administration.
The government said that it was monitoring developments around Liberty Steel, and said it hoped that the company succeeded with its plans to continue trading.
Liberty Steel was approached for comment.
UK unveils 10-year life science plan – ABPI says it 'falls short'
The UK has finally revelled its ten-year life sciences sector plan, as part of the government’s industrial strategy.
The sector is worth £100bn to the economy and employers 300,000 people. The chancellor had already announced up to £520m for the life sciences manufacturing fund to pull investment into the UK, and red tape is being slashed to speed up clinical trials.
The government is also spending up to £600m on a health data research service alongside Wellcome, and is rolling out NHS ‘passports’ to speed up adoption of new tools like aI cancer scanners and wearable devices that detect disease early.
Peter Kyle, the science and technology secretary, described the UK’s life sciences industry as “one of the crown jeweels of the UK economy”.
Executives at GSK and Smith & Nephew welcomed the plan, while the main industry body was more critical, saying it “falls short” – as the government needs to ensure that new medicines are available on the NHS.
Tony Wood, chief scientific officer at GSK, was pleased to see
in particular, the reforms to incentivise more UK clinical trials, establish a new Health Data Research Service and create a network of translational labs and clinics to accelerate drug discovery and development. These changes can bring unique competitive advantage to the country and make the UK a leader in future life sciences research.
A GSK spokesperson added:
It’s critical that the UK also takes action with this new plan to recognise the value of innovative new medicines and vaccines for patients, society and the economy, and that all parts of the system work hard to get them to the people who need them.
Deepak Nath, chief executive of artificial hips and knees maker Smith & Nephew, said:
We are encouraged by the plan’s focus on the full life cycle of medical technologies – from research and development, and manufacturing, through to regulation, evaluation and adoption – and by the continued engagement with industry throughout its development.
AstraZeneca, Britain’s biggest pharmaceutical firm, was not included in the government’s press release. A spokesperson issued a bland statement:
The government is right to prioritise the life sciences sector which can be a driving force for publich health and growth. We look forward to working with the government to ensure patients in the UK benefit from the discovery efforts of the life sciences sector.
The Association of the British Pharmaceutical Industry said the government’s commitments are positive, but “are not enough to reverse the decline of the UK’s standing as a centre for life sciences”.
Richard Torbett, its chief executive, said:
The UK must address the core issue holding back the life sciences sector, the long-term disinvestment in innovative medicines that is increasingly preventing NHS patients from accessing medications that are available in other countries.
For too long, the UK has sought to be the place where innovation happens, but not the place where it is used. Without change, the UK will continue the slow slide down international league tables for research, investment, and the availability of new medicines.
The industry remains locked in negotiations with ministers over drug pricing. The ABPI singled out rocketing payment rates under the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) and the Statutory Scheme, now at between a quarter to a third (23.5%-35.6%) of a company’s revenue from sales of branded medicines to the NHS.
While no other country has an identical scheme to the UK, the 2025 payment rate has left the UK significantly out of line with comparable countries, with France’s average payment rate at 5.7%, Italy at 6.8%, Germany at 7%, Spain at 7.5%, Belgium at 7.9%, and Ireland at 9%, the industry body said.
Updated
Alex Schriver, spokesman for industry group Pharmaceutical Research and Manufacturers of America, said last week that any tariffs on the pharmaceutical industry are bad for patients.
Every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments and cures for patients.
UK drugmakers AstraZeneca and GSK declined to comment on the threat of US tariffs today, as nothing has been announced yet.
GSK chief executive Emma Walmsley said in late April that the company was “well prepared” and had been working on it for some time – by resetting its supply chain “for regional resilience and dual sourcing, and quite a bit of flexibility”.
GSK has also shifted to more specialty medicines, and been investing to improve productivity. Walsmley said at the time:
Obviously we are watching what’s going to be happening carefully but in summary, we are very well prepared to navigate and mitigate in the interests of patients and keeping supply secure.
Emily Field, head of European pharma research at Barclays, told CNBC this week that it is hard to single out a company that could be most affected by the levies.
It’s really difficult to say because they have really complex supply chains and companies like to keep it under the wraps.
Novo Nordisk has been called out just because we know a lot of active pharmaceutical ingredients for Wegovy are manufactured in Denmark, so that’s just one that investors have highlighted.
It could be a combination of tariffs and drug pricing that the industry and administration can strike a deal that is favorable to both parties.
Trump threatens to impose pharma and chip tariffs as soon as 1 August
Donald Trump has threatened to impose tariffs on pharmaceutical products and semiconductors as soon as 1 August, the latest deadline for the introduction of his “reciprocal” levies on individual countries.
The US president told reporters late on Tuesday the taxes on drug imports could be announced “probably at the end of the month, and we’re going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we’re going to make it a very high tariff”.
He added he had a similar timeline for imposing levies on semiconductors, as he believed it was “less complicated” to implement tariffs on the chips required by all electronic devices, but did provide further details.
Earlier in the month, Trump told a meeting of his cabinet that he expected to raise tariffs on pharmaceuticals as high as 200%, once he had given drug companies a year to a year and a half to bring their manufacturing to the US. He also threatened a 50% tariff on imported copper in an effort to increase US production of the metal.
The Trump administration began investigations in April into imports of pharmaceuticals and semiconductors into the US under section 232 of the Trade Expansion Act of 1962, as part of an attempt to impose tariffs on both sectors on national security grounds.
Reaction to Reeves' Mansion House speech
Here’s some reaction to last night’s Mansion House speech from Rachel Reeves.
“The chancellor has set out an extensive package of pro-growth reforms that will be well received across UK financial services,” said Dame Debbie Crosbie, Nationwide’s chief executive.
This includes welcome news for the housing market, with the chancellor confirming plans for greater flexibility in higher loan to income lending. At Nationwide, first-time buyers will be subject to reduced minimum income requirements from today, giving consumers an immediate and tangible benefit from the reforms.
Overall, the package has real substance and clear, positive intent. We will continue to work closely with Government as it takes steps to promote inclusive growth across the UK.
António Simões, the boss of insurance and pension group L&G said:
Driving long-term economic growth and prosperity requires action today and this package is another step in the right direction.
Paul Joyce, partner at LAVA Advisory Partners, said:
In a world that’s becoming increasingly protectionist, it’s nice to see a government open its arms to the world and say, “Welcome.” After the chancellor’s Mansion House speech, it’s absolutely right that the UK prioritises growth at this point in the cycle, and taking a more pragmatic approach to regulation is the right way to do it.
We’re seeing a lot of capital coming out of the US, looking to invest in Europe, so why not take the opportunity to entice that capital into the UK? We were told that one of the much-heralded benefits of Brexit was the ability to differentiate ourselves from the EU, and this is an example of the government actually seizing the initiative and looking to deliver on that promise.
Could they go further? They need to be careful not to go too far the other way and throw the baby out with the bathwater, but perhaps encouraging asset managers—particularly US private equity and venture firms—into the UK might also boost investment in entrepreneurial UK companies and give them the capital to take on larger businesses and grow internationally themselves.
There’s an opportunity to create a virtuous circle of investment, growth, and employment in the UK economy, which should help start to boost GDP and bridge the spending gap. Hopefully, this is the government’s first step on that journey and the start of a more positive outlook for the UK economy and the financial services sector.
However, Sam Hields, partner at the venture capital firm OpenOcean, said:
The chancellor’s promise to tear up red tape is a welcome first step but, unfortunately, it comes much too late. IPO fundraising in London just hit a 30-year low. If the UK wants to remain competitive, we need urgent, coordinated action that reduces friction for financial services while incentivising investment in high-growth sectors like AI, fintech, and enterprise software. That’s what will define the UK’s economic future and standing as a global leader in the industries of tomorrow.
Jake Finney, senior economist at PwC UK, said:
House price growth edged up in May, with annual inflation rising to 3.9%. The recovery from April’s sharp monthly fall suggests the market is beginning to stabilise following the disruption caused by the stamp duty changes. This supports our view that recent volatility reflects activity brought forward ahead of the tax change, rather than a sustained weakening in underlying demand.
Regional trends continue to diverge, with house price growth generally stronger in the North than in the South. This likely reflects more favourable affordability conditions in lower-priced regions, while higher house prices relative to incomes in the South continue to weigh more heavily on demand and price growth.
“he near-term outlook remains challenging, with households still highly sensitive to elevated prices amid stretched mortgage affordability. The Bank of England estimates that 3.6m households, just over 40% of mortgage holders, will see their monthly payments rise over the next three years. However, these pressures should gradually ease as mortgage rates continue to fall in line with the monetary policy easing cycle.
UK house price inflation rises to 3.9% while rents up by 6.7%
House price inflation in the UK accelerated in May, with the average home costing 3.9% more than a year earlier, while rents rose by 6.7%, according to official figures.
The average property cost £269,000, the Office for National Statistics said. The annual growth rate picked up from 3.6% in April.
Average house prices increased to £290,000 (up 3.4%) in England, £210,000 (up 5.1%) in Wales, and £192,000 (up 6.4%) in Scotland, in the 12 months to May.
Average monthly private rents increased by 6.7%, to £1,344, in the 12 months to June, less than the 7% increase in May but still high.
Rents increased to £1,399 (up 6.7%) in England, £804 (up 8.2%) in Wales, and £999 (up 4.4%) in Scotland, in the 12 months to June. In Northern Ireland, average rents increased to £852 (up 7.6%) in the 12 months to April.
In England, private rents annual inflation was highest in the North East (9.7%) and lowest in Yorkshire and The Humber (3.5%).
Average UK house prices increased by 3.9%, to £269,000 in the year to May 2025, up from 3.6% in the 12 months to April 2025.
— Office for National Statistics (ONS) (@ONS) July 16, 2025
Average UK private rents increased by 6.7% in the year to June 2025, this is down from 7.0% in May 2025.
Read more ➡️ https://t.co/xxT04s9O2o pic.twitter.com/YIiOciyJWY
Barclays said:
Barclays remains deeply committed to the fight against financial crime and fraud. The FCA’s investigation relating to Stunt & Co was centred around historical money laundering activity and made no findings that the bank had breached money laundering regulations.
As acknowledged by the FCA, Barclays undertook an extensive review and self-reported its findings to the FCA. Barclays fully cooperated with both investigations and has further strengthened its financial crime and other control capabilities.
Barclays fined £42m for 'poor handling' of financial crime risks
Barclays has been fined £42m by Britain’s financial watchdog over its “poor handling” of financial crime risks.
The Financial Conduct Authority said the penalties related to separate failings linked to the WealthTek and Stunt & Co businesses.
It fined Barclays Bank £39.3m for “failing to adequately manage money laundering risks” related to providing banking services to Stunt & Co, the gold bullion business run by socialite James Stunt.
In just over a year, Stunt & Co received £46.8m from Fowler Oldfield, a Bradford jeweller, in a multimillion-pound money laundering operation, the FCA said.
Barclays failed to properly consider the money laundering risks associated with the firm even after receiving information from law enforcement about suspected money laundering through Fowler Oldfield, and after learning that the police had raided both firms.
Barclays only conducted a review of its exposure to Fowler Oldfield through its customers, including Stunt & Co, after it learned of the FCA’s decision to prosecute NatWest over their relationship with Fowler Oldfield. By providing ongoing banking services to Stunt & Co, Barclays facilitated the movement of funds linked to financial crime.
Barclays Bank UK received a £3.1m fine for failing to check that it had gathered enough information to understand the money laundering risk, before it opened a client money account for the now-collapsed wealth management firm WealthTek, the FCA said.
Without the right information about WealthTek and how the account would be used, there was an increased risk of misappropriation of client money or money laundering. Clients went on to deposit £34m into the account. Barclays has agreed to make a voluntary payment of £6.3m to WealthTek’s clients who have a shortfall in the money they have been able to reclaim, according to the financial watchdog.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said:
The consequences of poor financial crime controls are very real – they allow criminals to launder the proceeds of their crimes, and they allow fraudsters to defraud consumers. Banks need to take responsibility and act promptly, particularly when obvious risks are brought to their attention.
In the first of these cases, Barclays secured a significant reduction in its fine through its extensive co-operation with our investigation and through making a voluntary payment to affected consumers at our request.
In March, James Stunt, the former son-in-law of Formula 1 tycoon Bernie Ecclestone, was cleared of taking part in a £200m money laundering operation at Leeds Crown Court. Four other men were convicted.
Updated
Chancellor of the exchequer, Rachel Reeves, said:
I know working people are still struggling with the cost of living. That is why we have already taken action by increasing the national minimum wage for three million workers, rolling out free breakfast clubs in every primary school and extending the £3 bus fare cap. But there is more to do and I’m determined we deliver on our Plan for Change to put more money into people’s pockets.
Mel Stride, the shadow chancellor, said Labour’s tax decisions were adding to pressure on households.
This morning’s news that inflation remains well above the 2% target is deeply worrying for families.
Updated
The pound has gained since the inflation figures were released, while yields on UK government bonds have also climbed.
The pound is up by 0.2% against the dollar at $1.3410. The FTSE 100 index is steady, up by 0.2%.
In bond markets, the yield (or interest rate) on five-year gilts, as UK government bonds are known, has hit its highest level since 23 June, rising by 3 basis points to 4.074%. The 30-year gilt yield has gained 4bps to 5.498%, the highest since 29 May.
Eurozone bond yields are steady, with the German 10-year yield, Europe’s benchmark, unchanged at 2.71%, close to a four-month high of 2.737% hit on Monday.
The UK inflation figures are “an uncomfortable print for the Bank of England,” said Sanjay Sanjay, Deutsche Bank’s chief UK economist.
Is an August rate cut in jeopardy? No, we don’t think so. There’s enough of a slowdown in GDP and the labour market to warrant a ‘gradual and careful’ easing of monetary policy. But the onus now rests on the labour market to shape how far and how fast the MPC can cut this year and next.
Services inflation, a measure the central bank views as a better guide to domestically generated price pressures than the headline rate, held steady at 4.7% in June, driven by the largest June increase in air fares since 2018. City economists had predicted a modest dip to 4.6%.
Updated
UK inflation hotter, but rate cuts still possible – analysts
Financial markets are still expecting a rate cut at the Bank of England’s next meeting on 7 August, with the probability seen at around 83%.
UK inflation hotter, but rate cuts still possible, said Chris Beauchamp, chief market analyst at IG.
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.
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.
Updated
Isaac Stell, investment manager at the investment service Wealth Club, said:
Higher petrol costs saw headline inflation jump to its highest level since January 2024, bad news for consumers and bad news for those with a hopeful eye on imminent interest rate cuts.
The surprising strength of the inflation figures adds additional issues to the UK’s mounting economic woes. All eyes will turn to the Bank of England who have indicated they are willing to cut rates given the cooling in the jobs market but are unlikely to be able to justify a cut when inflation has started to run hot once again.
In the absence of interest rate cuts, consumers are likely to feel a continued squeeze, unhelpful for the government’s growth agenda which has yet to show signs of life itself. Awful April has rolled into miserable May and in turn rolled into joyless June. The government will now pin its hopes on a Jubilant July.
Updated
Food prices rise by 4.5%, fastest since February 2024
Food prices rose at the fastest pace since February last year, by 4.5% in June.
Bread, cereals, and cake, along with meat, and milk, cheese and eggs (mainly cheddar cheese) went up in price. These were partially offset by small downward effects from chocolate products, as well as fruit juice.
Five categories saw inflation in double digits: beef and veal (20.4%), butter (20.0%), chocolate (16.3%), coffee (12.3%), and lamb and goat (10.2%).
Prices fell the fastest for: olive oil (-9.6%), rice (-3.1%), sugar (-2.6%), and frozen seafood (-1.3%).
Balwinder Dhoot, director of sustainability and growth at the Food and Drink Federation, said:
Food and drink inflation has risen once again in June, continuing a concerning trend in 2025. Food and drink inflation has consistently outpaced the overall rate of inflation throughout the year, and seen sharp increase in the past 12 months. It was 1.5% in June 2024, up to 4.5% last month, and we expect inflation to rise further this year.
The pressure on food and drink manufacturers continues to build. With many key ingredients like chocolate, butter, coffee, beef, and lamb, climbing in price – alongside high energy and labour expenses – these rising costs are gradually making their way into the prices shoppers pay at the tills.
The government’s new food strategy is an opportunity to create a more resilient food system. This should include looking again at the costs and regulations facing food and drink manufacturers in order to address creeping price inflation.
Updated
Rise in inflation is another blow to Rachel Reeves
The rise in inflation comes as Labour faces intense scrutiny over its economic management after two months of negative growth and with speculation mounting over tax rises.
Rachel Reeves sought last night to shrug off Britain’s anaemic growth performance at her Mansion House speech, telling City bankers she would slash red tape to help reboot the economy.
The UK’s annual inflation rate has risen this year after dramatic increases in water bills, energy costs and council tax – complicating the Bank of England’s approach to cutting interest rates.
Transport prices rose by 1.7% in the 12 months to June, up from 0.7% in May.
This was because the average price of petrol fell by 0.5 pence a litre between May and June, compared with a larger fall of 3p a litre this time last year. The average price stood at 131.9p a litre, down from 145.8p a year earlier.
Similarly, diesel prices fell by 0.6p a litre in June, compared with a fall of 4.8p a litre a year earlier. The average price was 138.5p a litre, down from 151.5p a year earlier. These movements resulted in overall motor fuel prices falling by 9% in the 12 months to June, compared with a larger fall of 10.9% in May.
Air fares rose by 7.9% between May and June 2025, compared with a rise of 3.2% a year earlier. Fares usually rise in June, but the increase this year was the largest June rise since 2018. The upward effect came from long-haul and European routes.
Updated
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.
— Office for National Statistics (ONS) (@ONS) July 16, 2025
Read the full article ➡️ https://t.co/dtb7FWO7pw pic.twitter.com/3oIGRpKqCw
Updated
Tread carefully with reform of bank ringfencing, writes our financial editor Nils Pratley.
Rachel Reeves called it “the biggest set of reforms to financial regulation in a decade”, and, in one narrow sense, her Leeds Reforms would qualify for the description.
If the ringfencing regime for banks were to be scrapped, we really would be entering a new era – or going back to an old one, since the separation of banks’ retail and investment banking activities was the single biggest regulatory change introduced after the 2008-09 crash to try to prevent another blow-up.
Reeves on Tuesday, however, merely announced a review to look at how reforms to ringfencing could “strike the right balance between growth and stability, including protecting consumer deposits”. One hopes that does not mean outright abolition, which is what banks such as HSBC, Lloyds and NatWest have been urging on the grounds that the rules trap capital and impede growth.
The stout defence of ringfencing from Andrew Bailey, governor of the Bank of England, has always felt more compelling: the regime has made banks safer and removal would increase the cost of loans and mortgages. It would surely be hard for a chancellor to override the Bank on this core question, especially when Barclays – which, in theory, might have most to gain from abolition as it has the largest investment bank – is also in the defence camp.
A fudged outcome would see more activities allowed within the ringfenced entity. It is technical stuff, but also deeply important. Get it wrong and the cautious voices sounding the alarm over a government in search of a sugar-rush of growth via financial deregulation would have a point. Tread carefully, chancellor: ditching ringfencing in its entirety risks unlearning the lessons of the last crisis.
In other respects, however, Reeves’s red tape-slashing, investment-boosting, obstacle-removing reforms can be criticised in the other direction: yes, some changes are sensible tidying-up exercises but others are underwhelming.
Investec’s UK economist Ellie Henderson said:
We expect inflation to have held steady at 3.4% in June, matching the Bank of England’s forecast made at the time of the May Monetary Policy Report. We also predict the core measure to have remained unchanged at 3.5%.
One part of inflation that has not trended lower as of late is food price inflation. The warmer weather has been blamed for rising food costs, with evidence such as from the BRC shop price inflation measure suggesting it will be an upward influence on the June numbers too.
This is likely to spill over into restaurant prices too, and the rise in employers’ national insurance contributions will not be helping limit price pressures in this sector, along with wider recreation, either. What has been welcomed however is the downtrend in rental inflation, a factor helping overall services inflation move lower.
Looking forward, she said:
Looking further ahead we expect more disinflationary pressure to present itself in the data over the remainder of the year. A continual loosening in labour market conditions amidst uninspiring economic growth should, by lowering wage pressures, weigh on services inflation, while our base case is that the recent spike in food price inflation is a temporary phenomenon.
Introduction: Official data expected to show UK inflation remained stable in June
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s UK inflation day! Economists are expecting the headline annual rate to have stayed at 3.4% last month, as rising food prices counter the impact from slower price rises for services. Discounting for clothes could be another factor – especially if the summer sales started earlier than usual.
Having spiked in April, inflation eased back in May, albeit only slightly, to 3.4% as measured by the annual change in the consumer prices index (CPI), which tracks the prices of a basket of goods and services each month.
The Office for National Statistics releases the data for June at 7am BST. The core rate of inflation, which strips out food and energy (which tend to be volatile) and is closely watched by the Bank of England, is forecast to have stayed at 3.5%.
Julien Lafargue, chief market strategist at Barclays Private Bank, said:
The market expects UK inflation to have stayed relatively stable in June at 3.4% year-on-year. This would reflect a small uptick in food prices offset by a deceleration in services inflation and still declining energy costs.
Given the weaker-than-expected GDP print in May, it would require a meaningful upside surprise in UK inflation for the Bank of England not to lower interest rates in August.
Morgan Stanley’s chief UK economist Bruna Skarica is also forecasting a 3.4% rate. She explains:
Food inflation | An express train: UK food inflation seems to be accelerating. The rise in May was concentrated, and thus initially not that concerning to us. But the British Retail Consortium is now suggesting an express pass-through of the recent hot weather to fruit and vegetable prices. It is peculiar we are not yet seeing a similar dynamic in the euro area food prices, where perhaps margins, competition or volumes all result in a softer pass-through of wholesale costs to retail prices.
Core goods | On sale….but when? Summer sales normally start towards the end of June, so an earlier index day might mean a bit firmer clothing prices. Still, we see anecdotal evidence of front-loaded sales, which intuitively makes sense to us, considering the likely front-loading in purchases of summer clothing on mild spring weather in April and May.
By contrast, inflation in the United States shot up in June as the impact of Donald Trump’s trade tariffs started to show in US prices. Annual inflation rose to 2.7% in June, up from 2.4% in May, data showed yesterday.
Last night, Rachel Reeves claimed that rules and red tape are acting as a “boot on the neck” of businesses and risk “choking off” innovation across the UK without bold reforms.
In a speech to City bosses attending the Mansion House dinner in the City on Tuesday evening, the chancellor heaped further pressure on regulators to allow for more risk in order to boost economic growth.
“It is clear that we must do more,” Reeves said. “In too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of growth.
The Agenda
9.30am BST: UK House prices for June
10am BST: Eurozone trade for May
1.30pm BST: US Producer prices for June
2.15pm BST: US Industrial production for June
Updated
