British inflation jumped unexpectedly to an 18-month high in June, official data showed Wednesday, heaping more pressure on the government and UK economy.
The Consumer Prices Index increased to 3.6 percent last month compared with an annual inflation rate of 3.4 percent in May as motor fuel and food prices stayed high, the Office for National Statistics said in a statement.
June’s level was the highest since January 2024 according to the ONS, while most analysts had forecast no change.
The inflation update follows recent official data showing Britain’s economy unexpectedly contracted for a second month running in May, placing more strain on Prime Minister Keir Starmer and the UK government as it faces uncertainty caused by US tariffs.
“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,” ONS acting chief economist Richard Heys said in a statement.
“Food price inflation has increased for the third month to its highest annual rate since February” 2024, he added.
In response, finance minister Rachel Reeves said “there is more to do” to help Britons “struggling with the cost of living”.
Analysts said that despite the rise to inflation, the Bank of England could still cut its key interest rate next month as the UK economy struggles to expand.
“The unexpected rise in CPI inflation… may not prevent the Bank of England from cutting interest rates by 25 basis points in August,” said Ruth Gregory, deputy chief UK economist at Capital Economics research group.
“But it will add to the pressure on the Bank to continue to cut rates at a gradual pace,” she added.
AFP
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