UK Inflation Cools to 2.6% in June, Undercutting Forecasts Ahead of the BoE's July 30 Decision

The UK's Consumer Prices Index rose 2.6% in the 12 months to June 2026, the Office for National Statistics reported on July 22 — down from 2.8% in May and softer than the 2.7% economists had penciled in. On a monthly basis, CPI rose just 0.1% in June, compared with a 0.3% rise in June of the previous year.

Core inflation, which excludes energy, food, alcohol and tobacco, held at 2.6% for a second straight month. Underneath that, services inflation — the component the Bank of England watches most closely for domestically generated price pressure — eased only slightly, from 3.7% to 3.6%, while goods inflation slowed more noticeably from 2.0% to 1.7%. Transport and food and non-alcoholic beverages were the largest downward contributors to the monthly change.

The data lands a week ahead of the Bank of England's next rate decision on July 30, giving the Monetary Policy Committee a headline number that undershot expectations, but a services inflation rate still running well above the 2% target — a split picture that leaves the case for near-term rate cuts unresolved rather than settled.