Commenting on today's data from the Office for
National Statistics that showed the annual rate of CPI inflation
rising to 3.6% in June 2025, up from 3.4% in May, Anna Leach,
Chief Economist at the Institute of Directors, said:
“A surprise uptick in inflation in June has pushed CPI to 3.6%,
the highest level since January 2024. The increase was driven in
large part by rising transport costs, with air fares seeing their
fastest annual rise since 2018 and petrol and diesel prices
falling more slowly than they did in May. But inflation also
picked up across a range of categories — including food, where
prices are still rising at 4.5% year-on-year. More concerning for
the Bank of England was the rise in services inflation, which
edged up from 4.6% to 4.7%. This is the Bank's preferred measure
of underlying inflationary pressure and had been expected to hold
steady. Its unexpected strength makes an interest rate cut in
August far less of a certainty.
“For households and businesses under strain from high borrowing
costs and persistent price pressures, today's figures will be a
disappointment. With inflation still proving sticky and economic
growth stagnating, the UK is skirting the edges of stagflation.
Attention now turns to tomorrow's labour market data, which will
be crucial for the Bank's decision-making. The MPC will want
clear signs that wage growth is moderating, and second-round
inflationary effects are fading, before it can cut rates with
confidence.”
