Home›Bonds & Rates›Inflation›UK inflation cools to 2.6% as food prices rise slowest…

UK inflation cools to 2.6% as food prices rise slowest in nearly two years

June inflation fell to 2.6% year over year from 2.8% in May, but analysts warn higher energy prices in July could lift the rate again.

Reported · Written up by our desk · Inflation

Food prices in the UK rose at their slowest pace in nearly two years in June, helping drive overall inflation lower, according to data cited by BBC Business. The Office for National Statistics said inflation in the year to June fell to 2.6%, down from 2.8% in the year to May, with declines in fuel and food playing the biggest roles.

Supermarket price competition and summer promotions helped reduce prices for staples such as margarine and sugar. ONS data also pointed to specific movements in food categories, with inflation for food and non-alcoholic beverages down 0.2% month over month, and price drops noted for items including sugar, chocolate, and confectionery, while some categories such as meat and vegetables rose.

Fuel costs also eased, as prices at the pump fell in June for the first time since the start of the war in the Middle East, the outlet said. However, BBC Business noted that higher crude oil prices after renewed hostilities could cause inflation to spike again, and warned that food inflation often lags by up to 13 months due to supply chain effects.

The British Retail Consortium attributed the softer food inflation to intense competition between supermarkets. BBC Business added that the new UK government welcomed the lower rate, while analysts cautioned it may be temporary, and noted policy steps such as the England bus fare cap returning to £2 in January and a plan to scrap VAT on domestic electricity bills for the rest of the year.

Latest closeWTI crude $87.52 ▲3.1%|Sugar $14.85 ▼0.2%

More like this

Sources