Inflation accelerates in the UK

The annual UK inflation rate rose to 3.6 percent in June 2025, the highest level since January 2024. This was up from 3.4 percent in May and above expectations of a stable pace. The main upward pressure came from transport prices, which rose by 1.7 percent (compared to 0.7 percent in May), largely driven by the cost of motor fuel.

Additional upward contributions came from airfares, train fares, and maintenance and repair of personal transportation equipment, particularly on long-haul and European routes. Clothing and footwear prices also rose (0.3 percent versus 0.5 percent), and food inflation rose to 4.5 percent, the highest level since February 2024, driven primarily by cakes and cheddar cheese. Meanwhile, services inflation held steady at 4.7 percent, while housing and utilities (7.7 percent versus 7.5 percent) and household services (6.9 percent versus 6.7 percent) saw declines. Month-on-month, the CPI rose by 0.3 percent, up from a 0.2 percent increase in May. Core inflation also accelerated, reaching 3.7 percent annually and 0.4 percent monthly.