Consumer prices in the UK rose by 2% year-on-year in June, according to a report from the country’s Office for National Statistics (ONS).
The Office for National Statistics said restaurants and hotels made the biggest contribution to the year-on-year rise in inflation, with some economists attributing the increase to Taylor Swift’s UK tour. The biggest contributors to the decline were clothing and footwear, which saw strong sales during the month.
On a month-on-month basis, consumer prices rose 0.1 per cent after rising 0.3 per cent a month earlier.
Analysts polled by DailyFX had expected the annual rate to fall to 1.9 per cent. The monthly figure matched analysts’ forecasts.
The CPIH index (inflation adjusted for homeowners’ housing costs) in annual terms remained at May’s level of 2.8%. In monthly terms, prices in this index rose 0.2% after 0.4% in May.
The biggest contributor to the acceleration in annual inflation was prices in the transport sector, which rose 0.7% in annual terms, the largest annual price increase since September 2023. Meanwhile, food and non-alcoholic beverage price growth slowed to 1.5 per cent from 1.7 per cent a month earlier, with alcohol and tobacco prices rising 7.3 per cent.
Annual core inflation (excluding energy, food, alcohol and tobacco prices) remained at 3.5% in May, as analysts had expected. Luke Bartholomew, deputy chief economist at asset management firm abrdn, formerly Aberdeen Asset Management, said:
Today’s inflation report will keep the Bank of England’s August rate decision on a knife edge. More fundamentally, the ongoing stickiness of services inflation will leave the Bank wondering how long inflation will stay at the 2% target.
Prime Minister Keir Starmer has stressed that raising the UK’s economic growth rate will be the top priority of his Labour government. Later on Wednesday, his government will announce its plans for next year. Starmer said the measures announced in the king’s speech to parliament would “take the brakes off Britain” and “create wealth for people across the country” by boosting economic growth.
