THE inflation of the United Kingdom unexpectedly increased to the highest level since January 2024, as the budget of the Labor Government has increased food accounts while maintaining pressure on the Bank of England (BOE), which is trying to reduce interest rates.
Consumer prices inflation increased to 3.6% in June from 3.4% previously, the National Statistical Service of the United Kingdom announced Wednesday (16.7.2025). It was above the unchanged measurement provided for by economists and Boe. Boe andrew Bailey has pointed out that there will be other interest rates after a sharp decline in employment since the labor government hit businesses with higher payroll taxes and an increase in the minimum wage in April.
However, today’s elements will be a headache for interest -bellings that have expected that recent inflation increases would be short -lived. The Central Bank of the United Kingdom had predicted in May that the ICC would remain at 3.4% throughout the summer before it was accelerated again in September.
The pound rose 0.2% to $ 1,3414, ready to discontinue an eight -day negative series. Traders have limited bets to reduce Boe interest rates and now see relaxation of 49 base points by the end of the year, compared to 53 bases before the data.
“The economy is still clearly struggling to shake off a period of sticky inflation,” said George Rogers of JP Morgan. “This higher than the expected measurement of inflation does not facilitate the bank’s job.”
While overall inflation is well above the target of 2% of the central bank, BOE has predicted that the rise will begin to be reversed by the end of the year and places more emphasis on underlying indicators. This is partly due to the fact that the recent cooling of the economy – including labor market weakening – is likely to slow down the rate of rise in consumer prices.
However, Inflation of services – Indication of the domestic pressures that Boe closely monitors – kept at 4.7%higher than expected.
Food prices – which are important for the expectations of households for inflation – increased by 4.4% – The highest rate since February 2024.
The cost of alcoholic beverages and tobacco noted jump 6.4%from an increase of 5.4% in May.
The retailers have accused recent increases in employment costs announced in the first labor budget to boost food price inflation.