{"id":33146,"date":"2025-07-17T17:36:25","date_gmt":"2025-07-17T17:36:25","guid":{"rendered":"https:\/\/news.godj.com\/news\/uk-inflation-hits-highest-rate-for-almost-a-year-and-a-half\/"},"modified":"2025-07-17T17:36:25","modified_gmt":"2025-07-17T17:36:25","slug":"uk-inflation-hits-highest-rate-for-almost-a-year-and-a-half","status":"publish","type":"post","link":"https:\/\/news.godj.com\/news\/uk-inflation-hits-highest-rate-for-almost-a-year-and-a-half\/","title":{"rendered":"UK inflation hits highest rate for almost a year and a half"},"content":{"rendered":"


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Lucy Hooker and Connie Bowker<\/span><\/p>\n

Business reporters, BBC News<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Prices rose by more than expected in the year to June, pushing inflation to 3.6%, the highest it has been since January 2024.<\/p>\n

Higher prices for food and clothing, air and rail fares – and a lower drop in fuel prices than this time last year – contributed to higher inflation, official figures show.<\/p>\n

The rate at which prices increase matters to shoppers, whose money doesn’t go as far if goods and services are becoming rapidly more expensive.<\/p>\n

Inflation remains much higher than the Bank of England’s target rate of 2%, but a cut in the cost of borrowing is still expected at next month’s rate-setting meeting.<\/p>\n<\/div>\n

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The pace of price rises affects whether the Bank decides to raise or lower interest rates as higher rates can slow inflation by dampening economic activity.<\/p>\n

The higher figure for June was unexpected, with economists having predicted the inflation rate would stay at the 3.4% it hit in April and May.<\/p>\n

Yael Selfin, chief economist at KPMG UK, said persistent underlying pressures, including tax rises in April, meant inflation was likely to peak at 4% in the autumn.<\/p>\n<\/div>\n

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Richard Heys, acting chief economist for the Office for National Statistics (ONS) said the largest contribution to June’s higher inflation came from transport.<\/p>\n

While petrol and diesel are less expensive than they were a year ago, the price fell only slightly between May and June this year, compared to a larger fall in the same month last year.<\/p>\n

Airfares, which can be volatile, were higher, specifically long-haul and European routes, the ONS said.<\/p>\n

The rise in rail fares came from more expensive tickets on international routes.<\/p>\n<\/div>\n

‘Groceries add up’<\/h2>\n<\/p>\n
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Average wages have risen over the past year, by 5.2%, suggesting many people will not be worse off overall, but shoppers, particularly those on low incomes, are more affected by higher prices for daily staples such as food and petrol.<\/p>\n

Alissia Mardlin, a bartender from London, said her rent in a shared flat was “extortionate” leaving her with little spare spending money.<\/p>\n

“I eat sweetcorn and pasta,” she said, blaming the higher cost of living.<\/p>\n

Private rents increased by 6.7% in the year to May, according to figures published by the ONS on Wednesday, a slightly slower pace than a month earlier.<\/p>\n

House prices picked up again, rising by 3.9%.<\/p>\n

Jonathan Ballantyne, a marketing manager from Bishop’s Stortford, told the BBC he had not noticed much change in his supermarket shop but was noticing a squeeze on petrol and energy costs.<\/p>\n

“I’m more conscious of not driving places because I’m thinking what is it going to be costing,” he said.<\/p>\n

Saul, who did not want to share his surname, said he had noticed coffee and beer getting more expensive, making people less likely to go out and socialise.<\/p>\n

“Groceries add up massively,” he said. “Meal deals in supermarkets have gone up massively – they’ve increased by 50p since I can remember.”<\/p>\n<\/div>\n

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\"Young<\/div>\n<\/div>\n

Saul said he had noticed basic things like coffee getting more expensive<\/figcaption><\/p>\n<\/figure>\n
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Food prices rose at a rate of 4.5% in the year to June, the highest rate since February 2024 but well below the peak seen two years ago.<\/p>\n

Food industry representatives said manufacturers were facing higher costs for key ingredients – such as chocolate, butter, coffee and meat – as well as higher energy and labour costs.<\/p>\n<\/div>\n

Bad for savers<\/h2>\n<\/p>\n
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The higher inflation figure follows news last week that the economy shrank unexpectedly in May<\/a>.<\/p>\n

Chancellor Rachel Reeves said she knew people were “still struggling with the cost of living” but said the government’s plans included putting “more money into people’s pockets”.<\/p>\n

In her annual Mansion House speech on Tuesday<\/a>, the chancellor emphasised the importance of growth to putting the UK back on track.<\/p>\n

She said the financial industry it must change the “negative” narrative around savers putting money in stocks and shares.<\/p>\n

Caitlyn Eastell, spokesperson for the personal finance publication, Moneyfactscompare.co.uk said higher inflation was potentially “bad news” for people’s wealth, as it is higher than the average return on savings accounts.<\/p>\n

She advised them to “shop around” for the best savings returns.<\/p>\n

Interest rates for savers may fall further if the Bank of England cuts borrowing costs as expected in August.<\/p>\n

However, Andrew Sentance, a former member of the committee which sets interest rates, said on social media he believed it would be “irresponsible” to cut rates with inflation rising.<\/p>\n

Other commentators, including KPMG’s Selfin, expect the higher rate to “reinforce the Bank of England’s cautious approach”.<\/p>\n

Inflation currently remains well below the peaks it reached after Russia’s invasion of Ukraine, when higher energy prices pushed up costs across the board. In October 2022, it reached 11.1%.<\/p>\n<\/div>\n<\/div>\n


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Lucy Hooker and Connie Bowker Business reporters, BBC News Getty Images Prices rose by more than expected in the year to June, pushing inflation to 3.6%, the highest it has been since January 2024. Higher prices for food and clothing, air and rail fares – and a lower drop in fuel prices than this time […]<\/p>\n","protected":false},"author":1,"featured_media":33147,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[61],"tags":[3188,667,916,308,653],"class_list":["post-33146","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-highest","tag-hits","tag-inflation","tag-rate","tag-year"],"_links":{"self":[{"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/posts\/33146","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/comments?post=33146"}],"version-history":[{"count":1,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/posts\/33146\/revisions"}],"predecessor-version":[{"id":33148,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/posts\/33146\/revisions\/33148"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/media\/33147"}],"wp:attachment":[{"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/media?parent=33146"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/categories?post=33146"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/tags?post=33146"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}