“June’s slowdown is a false dawn as it may have already been reversed this month with higher energy bills, following Ofgem’s energy price cap rise, likely to have lifted inflation above 3%.
“Though stubborn services and core inflation suggest that the UK remains exposed to the inflationary fallout from the Iran war, weaker wage growth and a sluggish economy will help blunt any second-round effects.
“Renewed US–Iran hostilities have reignited inflation fears, with rising oil prices and supply chain pressures putting the prospect of inflation touching 4% later this year back on the table, despite October’s VAT cut on electricity bills.
“Elevated inflation will likely become a more notable economic headache for the new Chancellor in the coming months by deepening the cost of living crunch, while also squeezing his fiscal headroom, raising borrowing costs, and increasing financial market volatility.
“These benign figures quash any lingering prospect of a July rate rise, particularly as rate-setters may want to assess the impact of any measures announced by the new Prime Minister before deciding whether to tighten policy again.”
ENDS
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* includes parent companies. Source: ICAEW member data March 2026, Interbrand, Best Global Brands 2025.
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