UK Inflation Slows Temporarily as Energy Costs Rise Again
British inflation cooled to an annual rate of 2.6% in June, its weakest increase since March 2025, but this slowdown is likely only temporary according to analysts.
The drop was partly due to a brief de-escalation in the Iran war, which reduced fuel prices. However, the conflict has reignited and energy costs are rising again.
Manufacturers' input costs fell by 2.0% from May, and food prices were only 1.6% higher last month compared with a year earlier.
New Prime Minister Andy Burnham's government has announced measures to ease living costs, including a cut in tax on energy bills and a lower cap for bus fares.
Despite this, economists predict inflation will rise to 3% in the third quarter, with some expecting it to climb as high as 3.5% by the end of 2026 due to increased wholesale energy prices.