Britain’s annual rate of consumer price inflation unexpectedly rose to its highest in over a year at 3.6% in June, official figures showed on Wednesday.
This potentially makes it a tougher call for the Bank of England to cut interest rates next month.
June’s reading from the Office for National Statistics took the annual CPI rate to its highest since January 2024, against expectations for it to remain unchanged at May’s reading of 3.4%.
British inflation has risen steadily since touching a three-year low of 1.7% last September, and in May the Bank of England forecast it would peak at 3.7% in September – almost twice the central bank’s 2% target.
The Pounds Sterling rose slightly against the dollar after the data, which may put pressure on the BoE not to cut interest rates at its next meeting in August.
“While we still expect the Bank of England’s Monetary Policy Committee to continue gradually cutting rates, today’s upside inflation surprise means its August decision will be finely balanced,” Martin Sartorius, principal economist at the Confederation of British Industry, said.
Higher costs for motor fuels, air fares and rail fares were the biggest contributor to the rise in the inflation rate between May and June, the ONS said, and it also noted an increase in the cost of clothing, shoes, red wine and lager.
Previously, April brought a particularly sharp jump in inflation to 3.5% from 2.6% due to rises in regulated energy and water tariffs, a spike in air fares, and upward pressure on the cost of labour-intensive services from a rise in employment taxes and the minimum wage.
Reuters/Hauwa Abu