UK inflation cools faster than expected to 2.6% in June as food and fuel prices drop – business live

UK inflation eased more quickly than economists had expected in June, falling to 2.6% as cheaper food, fuel and clothing helped take pressure off household budgets, according to a monitored public feed from The Guardian Business.

The latest reading points to a fresh slowdown in price growth after a period in which consumers were squeezed by higher living costs. The feed said food prices declined during the month, with falls in items including chocolate, margarine and beef. Clothing prices also dropped as summer sales got under way, with retailers offering larger discounts than a year earlier.

Lower fuel prices were another major factor behind the softer inflation figure. The feed also noted that the cost of raw materials fell for the first time since January, mainly because crude oil was cheaper, while the rise in the prices charged by factories slowed again. Together, those movements suggest that some of the pressure feeding into consumer prices has eased, at least for now.

However, the improvement may not last. The feed said oil prices have risen again amid renewed tensions in the Middle East, raising the possibility of renewed inflationary pressure later in the year. It also said the Bank of England will be watching closely to see whether the recent energy-related easing remains a temporary shock or develops into a broader domestic inflation problem.

A cooling labour market, the feed added, suggests there is currently little sign of the kind of wage-driven second-round effects that could prompt tighter monetary policy.

New chancellor John Healey welcomed the fall in inflation but said the government still had more to do to support households. In a statement quoted in the feed, he said lower inflation was “news families want to hear” but added that ministers needed to provide more breathing space for people. He pointed to recent cost-of-living measures, including a cut in VAT on electricity bills and a planned £2 cap on bus fares from January, describing the government’s first week as focused on the cost of living.

The inflation figures are part of a wider day of economic updates tracked in the live feed, which also listed results from companies including Wetherspoon and Reach, alongside Alphabet earnings later in the day.

This report is based on a monitored public feed and attributes details to The Guardian Business. Source: The Guardian Business - https://www.theguardian.com/business/live/2026/jul/22/uk-inflation-food-and-fuel-prices-drop-economy-latest-news