UK inflation falls to 2.6% in June, easing rate hike concerns

Key facts

• UK inflation fell to 2.6% in June, down from 2.8% in May.
• Economists had predicted inflation would fall to 2.7%.
• The CPIH measure of inflation was 2.8% in June, down from 3.0% in May.
• Transport and food prices were the main drivers of the decrease.
• Core inflation measures remained unchanged.

UK inflation decreased more than anticipated in June, falling to 2.6%. This marks a significant drop from the previous month and offers a potential boost to the new prime minister's agenda to lower the cost of living and stimulate the economy. Economists had forecast a slight decline to 2.7%, but the actual figure came in lower, influenced by reduced petrol and transport costs, and a stable impact from global conflicts on food and energy supplies. The lower inflation reading may alleviate concerns within the Bank of England regarding persistent price pressures, potentially easing the likelihood of an interest rate hike. The Consumer Prices Index including owner occupiers' housing costs (CPIH) also saw a decrease, falling to 2.8% from 3.0% in May. While core inflation measures, excluding volatile energy, food, alcohol, and tobacco, remained unchanged, the overall trend suggests a cooling inflationary environment.