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Inflation rises to 3.6 per cent with food costs hitting hard

Inflation rises to 3.6 per cent with food costs hitting hard

Glasgow Times16-07-2025
The ONS said annual food price inflation hit the highest level since February 2024, while transport costs also pushed up the cost of living.
ONS acting chief economist Richard Heys said: 'Inflation ticked up in June driven mainly by motor fuel prices which fell only slightly, compared with a much larger decrease at this time last year.
'Food price inflation has increased for the third consecutive month to its highest annual rate since February of last year.
'However, it remains well below the peak seen in early 2023.'
Chancellor Rachel Reeves said there was 'more to do' to help bring inflation down.
She said: 'I know working people are still struggling with the cost of living.'
'There is more to do and I'm determined we deliver on our Plan for Change to put more money into people's pockets,' she added.
The surprise increase in inflation will be watched closely by the Bank of England ahead of its next interest rate decision in August.
Policymakers are widely expected to cut rates again next month, from 4.25% to 4%, given a slowing wider economy, but the latest unexpected rise in inflation may see the Bank tread cautiously further out, according to experts.
Additionally, core CPI (CPI excluding energy, food, alcohol, and tobacco) rose by 3.7% in the 12 months to June 2025, up from 3.5% in the 12 months to May.
The news has not been welcomed by those looking to secure or renew mortgages. Ranald Mitchell, Director at Charwin Mortgages, says: 'Inflation rising to 3.6% is a hammer blow for households and a warning shot for the economy. It shatters hopes of imminent rate cuts, leaves mortgage borrowers exposed, and offers little relief to savers still losing out in real terms. Once again, the Bank of England is left carrying the weight while the Government offers no plan, no leadership and no accountability. Without urgent action, this will only get worse.'
David Belle, Founder at Fink Money, adds: 'Inflation is up and the spirit of businesses and consumers in this country is down. We are heading for stagflation without a backdrop for growth. The Bank of England is in for a tricky time now.
"Try to cut and stimulate growth and shift inflation higher or raise rates and batter the economy even more to contain inflation. What's certain is that the government is totally out of its depth and running the economy into the ground."
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Rob Mansfield, Independent Financial Advisor at Rootes Wealth Management, says: 'The cost of living crisis continues to bite. The rise in motor fuels was expected given the war in the Middle East and it shows how vulnerable our island is to events all over the globe.
"Most people can't avoid these price rises, so they ask for higher wages, which can in turn drive up prices.'
The figures come after gross domestic product (GDP) shrank by 0.1% in May, following a 0.3% fall in April and leading to fears of a contraction overall in the third quarter.
Jobs figures on Thursday are expected to show a further slowdown in wage growth, which may help smooth the path for a rate cut.
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