CPI inflation dips to 2.6% in June

CPI inflation fell back in June to 2.6% – from 2.8% in May – as inflationary pressures eased, figures from ONS revealed today.

The rate is the lowest since late 2024.

In a welcome sign that inflationary pressures had eased in key ares, ONS said that transport, food and non-alcoholic beverages were the biggest downward drivers in the monthly change in both CPIH (Consumer Prices Index including Housing) and CPI (the Consumer Prices Index) annual rates.

ONS said that the Consumer Prices Index (CPI) rose 2.6% in the 12 months to June, down from 2.8% the previous month. On a monthly basis, CPI rose by 0.1% in June 2026, compared with a rise of 0.3% in June 2025.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) increased 2.8% in the 12 months to June 2026 but this was down from 3% the previous month. On a monthly basis, CPIH rose by 0.2% in June 2026, compared with a rise of 0.3% in June 2025.

Core CPIH (CPIH excluding energy, food, alcohol and tobacco) rose 2.8% in the 12 months to June 2026, unchanged from the 12 months to May while the CPIH goods annual rate slowed from 2.0% to 1.7%.

The CPIH services annual rate was unchanged at 3.6%. The CPI services annual rate eased from 3.7% to 3.6%.

RPI, the older measure of inflation, dipped from 3.1% to 3%.

Reaction to the drop was mainly positive with some caution about the future direction of inflation.

New Chancellor John Healey MP said in a statement: “Falling inflation is news families want to hear but there is much more to do to give people the breathing space they need. That is why yesterday we cut VAT on electricity bills and today we’re announcing a £2 cap on bus fares from January. We have chosen to focus on the cost of living in our first week, signalling that concern for working people will be at the heart of everything we do.

“Both these changes are a win-win. They help keep inflation down, while helping people afford the essentials.”  

Danni Hewson, AJ Bell head of financial analysis, said: “June was like a breath of fresh air for many cash strapped families who will have noticed that the price at the pump fell significantly, for the first time since the conflict in the Middle East began at the end of February.

“The resumption of hostilities in the Middle East has seen wholesale prices of gas and oil jump, with the price of Brent crude now rounding $93 a barrel and motorists already experiencing climbing prices. For Andy Burnham it’s a tantalising glimpse of what might have been if geopolitics hadn’t thrown a spanner in the works, with UK inflation in June below that of the EU – although it was above that of both France and Germany.

“For the Bank of England, it’s likely to buy them another month to consider their options. Market expectation of an interest rate hold at next week’s meeting firmed up on release of the data. But rate setters will face the real test in September. The vote split and updated forecast will be closely watched for clues about how many hikes may be required to keep the economy in check.”

Felix Feather, economist at Aberdeen Investments, said: “June’s inflation data offers some welcome relief for policymakers. Lower petrol and diesel prices over the month mean that energy made less of a contribution to inflation than previously, helping to pull the headline rate lower.

“However, this relief is likely to be fleeting. Household energy bills have yet to fully reflect this summer’s energy price shock, and the increase in the Ofgem price cap will push inflation higher again in the months ahead. The proposed 5% cut to household fuel VAT will come too late to have an effect in the summer. And when it does arrive, the difference it will make to the inflation outlook will be almost negligible – around 0.1ppt off the headline rate.

“As a result, we still expect inflation to move back above current levels over the remainder of the year, eventually breaching 3% even if tensions in the Middle East moderate.”