The UK's inflation rate climbed to 3.6% in June, the highest in 16 months, unexpectedly surpassing the predicted 3.4%. This rise was driven by persistent increases in transport and food prices, particularly motor fuel, which saw only a minor decrease compared to a larger drop last year. Food price inflation reached 4.5%, the highest since February 2024. The unexpected rise in services inflation may hinder the Bank of England's plans for interest rate cuts, as concerns about economic stagnation and high borrowing costs loom.
The UK’s annual inflation rate surged to a 16-month high of 3.6% in June, influenced by rising motor fuel and food prices, complicating interest rate strategies.
Economists had anticipated a steady inflation rate of 3.4%, but actual data reveals renewed price pressures, particularly in transport and food.
The latest figures suggest that the Bank of England may delay future interest rate cuts due to stickier inflation, particularly in services.
With the MPC's rate cuts already executed this year, any further reductions seem uncertain, as inflation persists.
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