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The Office for National Statistics placed UK inflation at 2.6 percent for June, down from 2.8 percent in May and below the 2.7 percent forecast by economists, marking the lowest level since March 2025. Transport, food and non-alcoholic beverages provided the biggest downward pull on the annual rate, the agency reported. Its data showed the decline came as households benefited from reduced prices in key daily categories while overall price pressures continued to moderate from earlier peaks.
Motor fuel costs eased notably, with petrol dropping 2.1 pence per litre and diesel falling 10.7 pence per litre on the month, according to the Office for National Statistics. The agency noted this represented the first monthly decline in petrol prices since a February conflict drove them higher, although fuel prices still stood 21.3 percent above year-earlier levels. Food prices slipped 0.2 percent from May, pushing the annual food inflation rate to 1.7 percent from 2.2 percent, the statistical office added in its release.
Grant Fitzner, chief economist at the Office for National Statistics, attributed the slowdown to lower motor fuel prices especially for diesel, reductions in items such as chocolate, margarine and beef, as well as summer sales on clothing. He also cited lower raw material costs linked to oil prices as another factor weighing on the index. The breakdown from the agency illustrated how these specific movements combined to deliver a sharper-than-expected drop in the headline figure.
Chancellor John Healey described the falling inflation as good news yet emphasised that more remained to be done to relieve cost-of-living pressures, according to government statements carried in the data coverage. The new administration has cut VAT on electricity to zero from October 1, a step projected to save the average household about 45 pounds a year and reduce the CPI by 0.1 percentage points, Healey noted. A two-pound cap on bus fares set to begin in January forms part of the broader package aimed at supporting families, the chancellor added.
Trading Economics figures show the United Kingdom’s inflation rate has averaged 2.84 percent since 1989, having reached a high of 11.1 percent in October 2022 before retreating steadily. The Bank of England has indicated that inflation is likely to reach 3 percent in the third quarter of 2026 before moving closer to its 2 percent target thereafter. A Bank of England assessment found that spare capacity in the economy and falling energy base effects would support the return toward the target by 2027.
The Office for National Statistics data arrives as the government under Prime Minister Andy Burnham places renewed focus on cost-of-living issues following the recent elections. Earlier releases from the agency had shown core CPI rising slightly in May while services inflation picked up to 3.7 percent even as goods inflation slowed. Economists monitoring the series will examine forthcoming releases for signs of sustained moderation amid volatile global commodity markets.
