Report Summary

Period covered: June 2026

3 minute read

Note: This report summary is one or two months behind the current month as standard reporting practice. The content is indicative only and incomplete with certain data undisclosed. Subscribe to access this data or take out a free 30-day subscription trial now.

Inflation

Headline inflation falls below expectations: CPI eased to xx% YoY in June, down from 2xx% in May and below the xx% market forecast.

Core inflation unchanged: Core CPI remained at xx% YoY, with goods inflation slowing to xx% from xx% and services inflation easing to xx% from xx%.

Services pressure is not gone however, with restaurants and hotels inflation rising by xx% YoY from xx%, and recreation and culture edged up to xx% from xx%. Package holidays and accommodation added some upward pressure.

Transport inflation slows: Transport inflation eased to xx% YoY in June, down from xx% in May. The main drag came from motor fuels, especially diesel.

Diesel prices fell by xxp per litre to xxp, while petrol fell by xxp to xxp. This was the first monthly fall in petrol prices since the start of the Middle East conflict. Motor fuel inflation remains high at xx%, but the drop from xx% in May takes some heat out of the transport category.

Food inflation eases: Food and non-alcoholic drink inflation fell to xx% YoY fromxx% in May, the lowest rate since August 2024.

Prices fell by xx% on the month, following a xx% decline in May. Confectionery made the largest downward contribution, led by chocolate, with further easing from oils and fats, meat, dairy and vegetables.

Clothing returns to deflation: Clothing and footwear prices fell by xx% YoY in June, after rising xx in May. Prices decreased by xx on the month as summer discounting intensified. The fall was sharper than last year, showing as promotional activity was used to to stimulate demand.

Manufacturers face cost pressures: Output price inflation slowed to xx YoY in June from xx in May, while input cost inflation fell to xx from xx. The gap remains wide, leaving manufacturers under margin pressure across energy, packaging, food production and transport.

Market rate expectations remain cautious: Financial markets continue to expect the Bank of England to hold rates in the near term, with June’s softer headline reading reducing the case for an immediate hike. The firmer core inflation reading has kept the possibility of a later move on the table, with markets split between a hold and a rise in September at the time of writing.

Inflation outlook: June’s data changes the tone of the inflation story for now, but the next few months still look more difficult.

July’s energy price cap increase will push household bills higher, and the latest rise in oil and gas prices means the October cap is unlikely to deliver the same relief that looked possible a month ago. Inflation is expected to move back above 3% in the second half of the year, provided energy markets do not deteriorate again.

The Bank of England has little reason to rush. Services inflation has eased slightly, wage growth has softened and the latest food and fuel data should help calm concerns about a fresh rise in inflation expectations.

For the retail sector, the pressure has not gone away. Lower food inflation supports household budgets, but higher energy bills and renewed pressure in commodity markets will keep consumers cautious.

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Headline inflation falls below expectations: CPI eased to 2.6% YoY in June, down from 2.8% in May and below the 2.7% market forecast.