UK Inflation Surges to 3.6% in June 2025: Fuel and Food Drive Surprise Rise

📌 Key Takeaways

• Annual UK inflation hit 3.6% in June — highest since January 2024
• Transport prices jumped 1.7%, led by rising motor fuel costs
• Food inflation rose to 4.5%, driven by cakes and cheddar cheese
• Clothing and footwear reversed trend, rising 0.5% after months of decline
• Core inflation climbed to 3.7%, suggesting persistent underlying pressure
• Inflation eased slightly in housing and household services

🔺 UK Inflation Surprises to the Upside in June

The UK’s annual inflation rate rose unexpectedly to 3.6% in June 2025, up from 3.4% in May, defying economists’ forecasts of a flat reading. This marks the highest inflation print since January 2024, and raises fresh questions about when the Bank of England may begin easing interest rates.

On a monthly basis, the Consumer Price Index (CPI) rose by 0.3%, slightly higher than May’s 0.2% increase.

🛢️ Transport Costs Drive the Surge

A major driver of this month’s inflation uptick was the transport sector, which saw a 1.7% increase in prices, more than double May’s 0.7%:

• Motor fuel led the jump, reflecting global oil price trends
• Airfare inflation rose, particularly for long-haul and European routes
• Rail fares and maintenance costs of personal vehicles also climbed

This surge in transport-related prices contributed significantly to headline inflation and may continue if global fuel markets remain tight.

Food and Clothing Prices Climb

Food inflation jumped to 4.5%, the highest since February 2024, led by:

• Cakes
• Cheddar cheese
• General grocery basket increases

Meanwhile, clothing and footwear prices rose 0.5%, a sharp turnaround from -0.3% in May. Seasonal shifts and import-related cost pressures are likely behind the move.

🧾 Core and Services Inflation: Sticky and Stubborn

The core inflation rate, which excludes energy and food, also accelerated to 3.7% annually and 0.4% monthly, a sign that underlying price pressures remain persistent.

However, services inflation held steady at 4.7%, and there was modest relief in:

These slight declines may reflect easing wholesale energy prices or regulatory interventions.

Read More: UK Manufacturing PMI Falls Sharply in April

📉 What This Means for the Bank of England

The stronger-than-expected inflation data could delay any plans by the Bank of England (BoE) to begin cutting interest rates later this year. Markets had priced in easing as early as September, but persistent core inflation and rising food and transport costs may push that timeline back.

Expectations now hinge on:

• July inflation data
• Labor market indicators
• The next BoE monetary policy meeting in August

💬 Final Thoughts

With headline and core inflation both rising, the BoE may face mounting pressure to hold rates higher for longer. For households, energy relief may help, but cost-of-living pressures remain, especially for transport and food.

📢 How is rising inflation affecting your business or household? Share your views in the comments below!

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