UK inflation unexpectedly rose to 3.6% in the year to June, its highest level since January 2024, according to the Office for National Statistics (ONS). This marks an increase from May’s 3.4%,
driven by smaller-than-usual drops in fuel prices and rising costs for food, transport, and clothing.
Economists had forecast inflation to remain steady, but the faster-than-expected rise has surprised markets. Despite this, the Bank of England is still expected to cut interest rates at its next meeting, as inflation is now far below its post-pandemic peak of 11.1% in October 2022.
What’s driving prices up?
Fuel: Petrol and diesel are cheaper than last year, but prices didn't fall as much this June compared to last.
Transport: Higher air and rail fares added to the pressure.
Food & Clothing: Prices for groceries and fashion items rose, with food inflation at 4.5%—the highest since February.
ONS acting chief economist Richard Heys pointed to transportation and food as key drivers. Rising costs for ingredients like chocolate, butter, coffee, and meat, plus higher energy and labor costs, are hitting food manufacturers hard.
Everyday impact
Many households are feeling the squeeze, especially lower-income families.
Alissia Mardlin, a bartender in London, said high rent leaves her surviving on pasta and sweetcorn.
Marketing manager Jonathan Ballantyne has cut back on driving due to fuel costs.
Saul, a young Londoner, noted how rising prices for coffee, beer, and supermarket meal deals are discouraging social outings.
Despite these pressures, average wages have grown 5.2% over the past year, slightly offsetting inflation for many workers.
Government response
Chancellor Rachel Reeves acknowledged that “people are still struggling” but said the government is focused on stimulating economic growth and putting “more money into people’s pockets.” In her Mansion House speech, she emphasized growth as key to recovery.
Still, not everyone agrees on the path forward. Former Bank of England policymaker Andrew Sentance warned that cutting rates now could be “irresponsible” with inflation rising again. Photo by Se17eastst, Wikimedia commons.
