bloomshorts UK Inflation Hits 18-Month High
June witnessed an unexpected leap in the UK’s inflation rate, marking the highest point in 18 months, as reported by the Office for National Statistics.
The Consumer Prices Index (CPI) rose to 3.6% in June, up from 3.4% in May, with motor fuel and food prices identified as the primary drivers behind this increase. This development places additional pressure on the UK government and economy, already grappling with economic contraction and external uncertainties.
Economic Implications
Richard Heys, ONS acting chief economist, highlighted the role of motor fuel prices in this inflationary spike, noting a less significant decrease compared to the previous year. Food price inflation also saw a rise for the third consecutive month, reaching its highest annual rate since February 2024.
Finance minister Rachel Reeves acknowledged the challenges posed by the rising cost of living, emphasizing the need for further action to support affected Britons.
Bank of England’s Next Move
Despite the inflation uptick, analysts speculate on the possibility of the Bank of England proceeding with a key interest rate cut in August, aiming to stimulate the struggling UK economy. Ruth Gregory of Capital Economics suggests that while the inflation rise may not halt the anticipated rate cut, it could influence the pace of future reductions.
