UK Inflation Exceeds Forecast in June, Complicating BoE’s Policy Path
Investing.com – UK inflation rose more than anticipated in June, according to official data released Wednesday, adding pressure on Bank of England (BoE) policymakers as they attempt to steer the economy through a period of rising costs and weakening growth.
Annual consumer price inflation climbed to 3.6% in June, up from 3.4% in May, and remained well above the central bank’s 2.0% medium-term target.
On a monthly basis, inflation increased 0.3%, while core inflation—which excludes food and energy—rose 0.4% from May and registered an annual increase of 3.7%, up from 3.5% the previous month.
The figures were mostly in line with analyst expectations, but they reinforce concerns that price pressures are proving persistent.
The inflation uptick comes amid broader economic uncertainty linked to rising costs for UK businesses—driven by higher wages, National Insurance contributions, and energy bills—as well as the global impact of U.S. trade tariffs.
Meanwhile, GDP data for May signaled that the UK economy shrank for a second straight month, raising concerns about a possible downturn.
The BoE has repeatedly flagged the risk of inflation remaining elevated through the summer, despite briefly hitting its 2% target in May of the previous year.
In its June meeting notes, the Monetary Policy Committee (MPC) stated:
“Consumer price inflation is expected to remain broadly at current levels for the rest of the year before returning to target in 2026. Given this outlook, and ongoing disinflationary pressures, a gradual and measured reduction in monetary policy support remains appropriate. Policy is not on a fixed course.”
The Bank of England left interest rates unchanged at 4.25% in June. Its next policy decision is scheduled for August 6, with markets watching closely for any change in tone amid sticky inflation and slowing growth.
