Inflation jumps to 3.6% on fuel and food price pressures

Sky News

6 days ago

The rate of inflation has risen by more than expected on the back of fuel and food price pressures, according to the latest official figures.
The Office for National Statistics (ONS) reported a 3.6% level for the 12 months to June.
That was up from the 3.4% rate seen the previous month. Economists had expected no change.
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."
A key driver of food inflation has been meat prices.
Beef, in particular, has shot up in cost - by more than 30% over the past year - according to Association of Independent Meat Suppliers data reported by FarmingUK.
High global demand alongside raised production costs have been blamed.
A grocery industry source told Sky News last week that while strong competition for customers between supermarket chains was helping keep a lid on overall price growth, higher costs associated with Budget tax measures were not helping efforts to keep prices down.
The wider ONS data is a timely reminder of the squeeze on living standards still being felt by many households - largely since the end of the COVID pandemic and subsequent energy-driven cost of living crisis.
Record rental costs alongside elevated borrowing costs - the latter a result of the Bank of England's action to help keep a lid on inflation - have added to the burden on family budgets.
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Most are still reeling from the effects of high energy bills.
The cost of gas and electricity is among the reasons why the pace of price growth for many goods and services remains above a level the Bank would ideally like to see.
Added to that is the toll placed on finances by wider hikes to bills. April saw those for water, council tax and many other essentials rise at an inflation-busting rate.
The inflation figures, along with employment data due tomorrow, are the last before the Bank of England is due to make its next interest rate decision on 7 August.
The vast majority of financial market participants, and many economists, expect a quarter point cut to 4%.
That forecast is largely based on the fact that wider economic data is suggesting a slowdown in both economic growth and the labour market - twin headaches for a chancellor gunning for growth and juggling hugely squeezed public finances.
Professor Joe Nellis, economic adviser at the advisory firm MHA, said of the ONS data: "This is a reminder that while price rises have slowed from the highs of 2021-23, the battle against inflation is far from over and there is no return to normality yet - especially for many households who are still feeling the squeeze on essentials such as food, energy, and services.
"However, while the Bank of England is expected to take a cautious approach to interest rate policy, we still expect a cut in interest rates when the Monetary Policy Committee next votes on 7th August.
"Despite inflation at 3.6% remaining above the official 2% target, a softening labour market - slowing wage growth and decreasing job vacancies - means that the MPC will predict inflation to begin falling as we head into the new year, justifying the lowering of interest rates."