London, United Kingdom. British consumer price inflation slowed to 2.6% in June from 2.8% in May, helped by lower motor fuel prices during a brief de-escalation in the Iran war.
The reading was below the 2.7% forecast by economists polled by Reuters and marked the weakest annual increase since March 2025.
Fuel and input costs decline
Motor fuel prices fell month on month for the first time since the conflict began in late February. Manufacturers’ input costs declined by 2.0% from May, the Office for National Statistics said on Wednesday.
Britain’s headline inflation rate was lower in June than in the United States and the euro zone, where inflation stood at 3.5% and 2.8%, respectively.
Outlook remains uncertain
The conflict in the Gulf has reignited this month, raising energy costs. Analysts said the June reading was likely to represent a low point for inflation this year.
The Bank of England, which targets inflation of 2%, has said inflation is likely to rise to 3% in the third quarter.
Food prices were 1.6% higher in June than a year earlier, slowing from a 2.1% annual increase in May. The Bank of England considers food prices important in shaping public inflation expectations.
Government cost-of-living measures
New Prime Minister Andy Burnham has made easing living costs a priority since taking office on Monday. His government has announced a reduction in tax on energy bills and a lower cap on bus fares.
Matt Swannell, chief economic adviser to the ITEM Club forecasting organisation, said higher wholesale energy prices would more than offset the domestic power bill tax cut. He said inflation could rise towards 3.5% by the end of 2026.