UK Inflation Falls to 2.6% in June as Petrol Prices Ease

UK inflation eased more than forecast in June, offering some relief to households and giving the Bank of England additional room for manoeuvre. The Office for National Statistics reported on 22 July that the Consumer Prices Index rose 2.6% in the 12 months to June 2026, down from 2.8% in May and below the 2.7% consensus expectation. On a monthly basis prices rose 0.1%, compared with a 0.3% increase in June 2025. Core CPI, which strips out energy, food, alcohol and tobacco, was unchanged at 2.6%, while CPIH including owner-occupiers' housing costs slowed to 2.8% from 3%. The annual rate for goods eased from 2% to 1.7% and for services from 3.7% to 3.6%. A key driver was petrol, where prices fell for the first time since the Middle East conflict began, with transport and food costs also contributing to the overall picture. Inflation remains above the Bank's 2% target and some economists warn it could climb back above 3% later in the year. Most expect the Monetary Policy Committee to hold Bank Rate at 3.75% at its 30 July meeting, with at least one quarter-point rise still priced in before year-end. Government borrowing in June came in at about 16 billion pounds, slightly below the Office for Budget Responsibility forecast.