British inflation rose unexpectedly in June, reaching its highest level in a year and a half, according to official data released Wednesday.
The increase intensifies challenges for Prime Minister Keir Starmerโs government as it grapples with a sluggish economy and external pressures, including US trade tariffs.
The Consumer Prices Index (CPI) climbed to 3.6% last month, up from 3.4% in May, driven by persistently high motor fuel and food prices, the Office for National Statistics (ONS) reported. The figure marks the highest inflation rate since January 2024 and defies analysts’ expectations of no change.
ONS acting chief economist Richard Heys attributed the rise to fuel costs, which declined only marginally compared to a sharper drop last year. He also noted that food inflation accelerated for the third consecutive month, hitting its highest annual rate since February 2024.
The latest data compounds economic concerns after recent figures revealed the UK economy shrank for a second straight month in May. Finance Minister Rachel Reeves acknowledged the strain on households, stating, โThere is more to doโ to support Britons facing rising living costs.
Despite the uptick, analysts suggest the Bank of England may still proceed with an interest rate cut in August to stimulate growth. Ruth Gregory, deputy chief UK economist at Capital Economics, said the inflation rise may not deter a 25-basis-point reduction but could prompt a more cautious approach to future cuts.
The central bankโs decision next month will be closely watched as policymakers balance inflation risks against signs of economic weakness.
