UK inflation drops to 2.6% in June, lowest since March 2025

Inflation in the United Kingdom eased to 2.6% in the year to June, down from 2.8% in May, according to official data released on Wednesday, July 22. The figure, reported by the Office for National Statistics, marks the lowest rate since March 2025 and came in slightly below economists' expectations of 2.7%. The decline provides an early economic boost for new Prime Minister Andy Burnham, whose Labour administration took office this week with a pledge to tackle the cost of living.

The primary drivers behind the slowdown were falling prices for motor fuel, food, and non-alcoholic beverages. The ONS reported that average petrol and diesel prices dropped between May and June, with diesel seeing a significant decline of 10.7 pence per litre. This was the first monthly drop in petrol prices since the end of February, when the conflict in the Middle East sent oil prices soaring. Food prices fell by 0.2% month-on-month, with items like chocolate, margarine, and beef leading the decrease. Clothing prices also contributed to the downward trend as summer sales began with steeper discounts than a year ago.

Grant Fitzner, chief economist at the ONS, stated that the fall in motor fuel prices,...