Official data expected to show UK inflation remained unchanged in June
Date: 2025-07-16T05:53:38.000Z
Title: Ellie Henderson
Content: Investec's UK economist said:
We expect inflation to have held steady at 3.4% in June, matching the Bank of England's forecast made at the time of the May Monetary Policy Report. We also predict the core measure to have remained unchanged at 3.5%.
One part of inflation that has not trended lower as of late is food price inflation. The warmer weather has been blamed for rising food costs, with evidence such as from the BRC shop price inflation measure suggesting it will be an upward influence on the June numbers too.
This is likely to spill over into restaurant prices too, and the rise in employers' national insurance contributions will not be helping limit price pressures in this sector, along with wider recreation, either. What has been welcomed however is the downtrend in rental inflation, a factor helping overall services inflation move lower.
Looking forward, she said:
Looking further ahead we expect more disinflationary pressure to present itself in the data over the remainder of the year. A continual loosening in labour market conditions amidst uninspiring economic growth should, by lowering wage pressures, weigh on services inflation, while our base case is that the recent spike in food price inflation is a temporary phenomenon.
Update:
Date: 2025-07-16T05:50:34.000Z
Title: Introduction: Official data expected to show UK inflation remained stable in June
Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It's UK inflation day! Economists are expecting the headline annual rate to have stayed at 3.4% last month, as rising food prices counter the impact from slower price rises for services. Discounting for clothes could be another factor – especially if the summer sales started earlier than usual.
Having spiked in April, inflation eased back in May, albeit only slightly, to 3.4% as measured by the annual change in the consumer prices index (CPI), which tracks the prices of a basket of goods and services each month.
The Office for National Statistics releases the data for June at 7am BST. The core rate of inflation, which strips out food and energy (which tend to be volatile) and is closely watched by the Bank of England, is forecast to have stayed at 3.5%.
Julien Lafargue, chief market strategist at Barclays Private Bank, said:
The market expects UK inflation to have stayed relatively stable in June at 3.4% year-on-year. This would reflect a small uptick in food prices offset by a deceleration in services inflation and still declining energy costs.
Given the weaker-than-expected GDP print in May, it would require a meaningful upside surprise in UK inflation for the Bank of England not to lower interest rates in August.
Morgan Stanley's chief UK economist Bruna Skarica is also forecasting a 3.4% rate. She explains:
Food inflation | An express train: UK food inflation seems to be accelerating. The rise in May was concentrated, and thus initially not that concerning to us. But the British Retail Consortium is now suggesting an express pass-through of the recent hot weather to fruit and vegetable prices. It is peculiar we are not yet seeing a similar dynamic in the euro area food prices, where perhaps margins, competition or volumes all result in a softer pass-through of wholesale costs to retail prices.
Core goods | On sale….but when? Summer sales normally start towards the end of June, so an earlier index day might mean a bit firmer clothing prices. Still, we see anecdotal evidence of front-loaded sales, which intuitively makes sense to us, considering the likely front-loading in purchases of summer clothing on mild spring weather in April and May.
By contrast, inflation in the United States shot up in June as the impact of Donald Trump's trade tariffs started to show in US prices. Annual inflation rose to 2.7% in June, up from 2.4% in May, data showed yesterday.
Last night, Rachel Reeves claimed that rules and red tape are acting as a 'boot on the neck' of businesses and risk 'choking off' innovation across the UK without bold reforms.
In a speech to City bosses attending the Mansion House dinner at London's Guildhall on Tuesday evening, the chancellor heaped further pressure on regulators to allow for more risk in order to boost economic growth.
'It is clear that we must do more,' Reeves said. 'In too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of growth.
The Agenda
9.30am BST: UK House prices for June
10am BST: Eurozone trade for May
1.30pm BST: US Producer prices for June
2.15pm BST: US Industrial production for June
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