LONDON: UK inflation slowed to its lowest level in more than a year in June, helped by cheaper motor fuel, food and clothing, offering temporary relief to households before higher energy costs are expected to push prices up again.
Consumer prices rose 2.6% in the 12 months to June, down from 2.8% in May and the lowest annual rate since March 2025, the Office for National Statistics said Wednesday. The reading was below economists' median forecast of 2.7% and marked the third straight month inflation undershot expectations.
Petrol and diesel prices fell 3.1% during the month after crude oil declined amid hopes of a de-escalation in the US-Iran conflict. Food inflation eased to its lowest level since 2024, while heavy discounts on clothing also helped moderate price pressures. Services inflation, a key gauge of domestic price pressures closely watched by the Bank of England (BOE), slowed to 3.6% from 3.7%, although it remained slightly above forecasts.
The respite may prove short-lived. Yael Selfin, chief economist at KPMG UK, said June was "likely to mark the low point for inflation this year, with higher energy bills set to complicate the short-term outlook."
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Economists expect inflation to edge higher in July after Britain's household energy price cap rose 13%. Renewed hostilities between the US and Iran have also pushed crude oil back above $90 a barrel, while gas prices have climbed sharply in recent weeks.
Containing living costs remains a priority for the Labour government. Prime Minister Andy Burnham has pledged to give families "breathing space" and announced that value-added tax on household electricity bills will be scrapped from October, a move the government estimates will lower inflation by about 0.1 percentage point.
