UK inflation slowed more than expected in June 2026, with the Consumer Prices Index (CPI) rising 2.6% over the year, according to the Office for National Statistics (ONS) [1]. This figure was below the 2.7% forecast by economists and marked a decrease from 2.8% in May [1]. The main driver behind the cooling inflation was a drop in fuel prices, with diesel falling 10.7 pence per litre and petrol dropping 2.1 pence, marking the first monthly declines since the Middle East conflict began in February 2026 [1]. Despite this, motor fuel remained 21.3% more expensive than a year ago, though this was down from a 24.6% annual rise in May [1].
Other key data points include services inflation, which eased slightly from 3.7% to 3.6%, and core CPI, which held steady at 2.6% [1]. Factory input costs also showed signs of slowing, with producer input prices rising 7.3% over the year, down from 9.3% in May—the first slowdown since January [1]. In the housing market, average UK rent reached £1,388 a month, up 3.3% over the year, while house price growth cooled to 2.7% from 3.9%, a change attributed mainly to a stamp duty base effect [1].
The Bank of England is set to meet on July 30, and the softer inflation reading eases some pressure on policymakers [1]. However, the Bank's own forecasts still expect CPI to climb back above 3% by the end of the year [1]. Compared to other major economies, the UK's 2.6% inflation rate sits below the eurozone's 2.9%, but above France's 2.0% and Germany's 2.4% [1].
Food prices also contributed to the easing, with grocery inflation dropping to 1.7%, the lowest rate since August 2024 [1]. Clothing prices fell 0.5% over the year, largely due to summer sales rather than a broader cooling trend [1]. Despite the overall moderation, some components like services inflation remain elevated, indicating that underlying price pressures have not fully dissipated [1].
CONCLUSION
UK inflation cooled more than expected in June 2026, primarily due to falling fuel and food prices, providing some relief to the Bank of England ahead of its upcoming policy meeting. However, persistent services inflation and the Bank's forecast for a rebound in CPI suggest that inflationary pressures have not been fully resolved.