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UK inflation falls faster than expected to 2.6% in June

Business and economic groups warned the drop could be temporary, citing energy bill pressures tied to the Iran conflict and potential inflation risks later in 2026.

Reported · Written up by our desk · Economy

UK inflation in the United Kingdom slowed more quickly than expected in June, falling to 2.6% as food and fuel prices dropped, according to Guardian Business’ rolling coverage of the latest economic developments.

The coverage also highlighted warnings that the easing may not last. Martin Sartorius, lead economist at the Confederation of British Industry, said the slowdown could prove temporary, pointing to inflationary pressure from the Iran conflict hitting energy bills and some pass through to domestic prices.

Guardian Business reported that the Bank of England’s Monetary Policy Committee is expected to keep interest rates unchanged at its next meeting, supported by a “wait and see” approach amid an easing labour market, soft domestic activity, and tighter financial conditions.

Suren Thiru of ICAEW described June’s cooling as a “false dawn,” arguing it may be reversed by higher energy bills following Ofgem’s energy price cap increase, while also noting that stubborn services and core inflation leave the UK exposed to inflation fallout.

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