Report Summary

Period covered: June 2025

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 rises: CPI inflation unexpectedly rose to xx% in June, up from the xx% rise in May, and the sharpest rise since February 2024. On a monthly basis, CPI rose by xx%.

The uptick was driven by higher transport costs and a renewed rise in food prices.

Core inflation edges up: Core CPI, which excludes energy, food, alcohol, and tobacco, rose to xx%, from xx% in May. The increase was broad-based, with stronger contributions from travel, catering and clothing.

Goods and services inflation: Goods inflation rose to xx% from xx% in May. Services inflation remained elevated at xx%, held up by rail fares, catering costs, and housing-related pressures.

Transport prices drive increase: Transport made the largest upward contribution to the monthly CPI change. Air fares rose xx% between May and June, the sharpest June rise since 2018,  driven by higher long-haul and European routes.

Rail fares also surged, rising this year compared to a fall a year ago, particularly for international routes. 

Elsewhere, petrol and diesel prices fell month-on-month, but by much less than last year, narrowing the annual fall to -xx% (from -xx%).

Food inflation rises again: Food and non-alcoholic beverage inflation rose to xx%, up from xx% in May, marking the third consecutive monthly rise. Key contributors included cakes, meat, and cheese. While still below last year’s peaks, the upward drift may weigh on household confidence.

Clothing and footwear return to inflation: Clothing and footwear inflation rose xx% year-on-year, reversing two months of annual declines. Month-on-month price falls were smaller than usual, with less discounting than seen in June 2024

Supply chain and cost backdrop: Producer price data remains paused, but other indicators point to renewed input cost pressures. Oil prices remain elevated after spiking in June, while rising labour costs and global shipping disruption continue to affect pricing.

Financial market reaction: Markets still expect a rate cut at the Bank of England’s August meeting, with odds currently around xx%. Gilt yields have climbed slightly, and sterling strengthened following the inflation data release. The tone remains cautious, with services inflation staying stubbornly high.

Inflation outlook: June’s data confirms inflation is proving sticky. Services inflation remains elevated, offering little comfort for policymakers. While headline CPI is still expected to ease later this year, near-term risks have increased.

The Bank of England expects CPI inflation to rise to around xx% by September, before falling back towards the xx% target. But the path remains uncertain. Food and goods inflation has picked up again, while air fares surged and fuel price falls slowed, all of which are adding pressure to household budgets.

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CPI inflation unexpectedly rose to 3.6% in June, up from the 3.4% rise in May, and the sharpest rise since February 2024.