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| UK inflation hits highest for almost a year and a half | UK inflation hits highest for almost a year and a half |
| (32 minutes later) | |
| Prices rose by more than expected to 3.6% in the year to June, the steepest rise in inflation since January 2024, the Office for National Statistics (ONS) said. | Prices rose by more than expected to 3.6% in the year to June, the steepest rise in inflation since January 2024, the Office for National Statistics (ONS) said. |
| That marks a rise from the 3.4% rate in May, boosted by higher prices for food and clothing, air and rail fares, and a lower drop in fuel prices than this time last year. | |
| 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. | 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. |
| 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. | 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. |
| 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. | 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. |
| The faster pace of price rises for June was unexpected, with economists having predicted the inflation rate would stay at 3.4%. | The faster pace of price rises for June was unexpected, with economists having predicted the inflation rate would stay at 3.4%. |
| Yael Selfin, chief economist at KPMG UK, said persistent underlying pressures, including tax rises in April, meant she expected inflation to peak at 4% in the autumn. | |
| Richard Heys, acting chief economist for the ONS, the UK's official statistics authority, said the largest contribution to the higher rate came from transport. | |
| 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. | 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. |
| Airfares, which can be volatile, were higher, specifically long-haul and European routes, the ONS said. | |
| The rise in rail fares came from more expensive tickets on international routes. | |
| 'Groceries add up' | 'Groceries add up' |
| 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. | |
| Alissia Mardlin, a bartender from London, said her rent in a shared flat was "extortionate" leaving her with little spare spending money. | Alissia Mardlin, a bartender from London, said her rent in a shared flat was "extortionate" leaving her with little spare spending money. |
| "I eat sweetcorn and pasta," she said, blaming the higher cost of living. | "I eat sweetcorn and pasta," she said, blaming the higher cost of living. |
| 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. | 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. |
| "I'm more conscious of not driving places because I'm thinking what is it going to be costing," he said. | "I'm more conscious of not driving places because I'm thinking what is it going to be costing," he said. |
| 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. | 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. |
| "Groceries add up massively," he said. "Meal deals in supermarkets have gone up massively - they've increased by 50p since I can remember." | "Groceries add up massively," he said. "Meal deals in supermarkets have gone up massively - they've increased by 50p since I can remember." |
| Saul said he had noticed basic things like coffee getting more expensive | Saul said he had noticed basic things like coffee getting more expensive |
| 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. | 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. |
| Food industry representatives said food price rises were due to manufacturers facing higher costs for key ingredients - such as chocolate, butter, coffee and meat - as well as higher energy and labour costs. | Food industry representatives said food price rises were due to manufacturers facing higher costs for key ingredients - such as chocolate, butter, coffee and meat - as well as higher energy and labour costs. |
| 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". | 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". |
| In her annual Mansion House speech on Tuesday, the chancellor emphasised the importance of growth to putting the UK back on track. | In her annual Mansion House speech on Tuesday, the chancellor emphasised the importance of growth to putting the UK back on track. |
| She said the financial industry it must change the "negative" narrative around savers putting money in stocks and shares. | |
| 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. | |
| She advised them to "shop around" for the best savings returns. | |
| Lowering the cost of borrowing, through a reduction in interest rates, could help boost growth, as long as inflation does not pick up further. | Lowering the cost of borrowing, through a reduction in interest rates, could help boost growth, as long as inflation does not pick up further. |
| 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%. | 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%. |
| However, Andrew Sentance, a former member of the Bank of England committee which sets interest rates, said on social media he believed it would be "irresponsible" to cut rates with inflation rising. | However, Andrew Sentance, a former member of the Bank of England committee which sets interest rates, said on social media he believed it would be "irresponsible" to cut rates with inflation rising. |
| KPMG's Selfin said the higher rate was likely to "reinforce the Bank of England's cautious approach". |