UK Inflation Falls to 2.6%, Lowest Level in 15 Months

UK inflation slowed more than expected in June, offering some relief after months of persistent price pressures.

Figures published on 22 July 2026 show that the Consumer Prices Index (CPI) rose by 2.6% in the 12 months to June, down from 2.8% in May. The reading was below economists’ average forecast of 2.7% and marked the lowest annual inflation rate since March 2025.

Lower motor fuel prices, particularly petrol, were a major reason for the slowdown and helped reduce overall transport costs. Services inflation, which is closely watched by the Bank of England, also eased slightly from 3.7% to 3.6%, indicating some moderation in underlying price pressures.

For households, the figures mean prices are still rising, but at a slower overall rate than they were in May. A lower inflation rate does not mean prices are falling. It means the pace of price increases has slowed.

Drivers may feel some benefit from lower fuel prices, although many everyday goods and services still cost more than they did a year ago. Inflation also remains above the Bank of England’s 2% target, so pressure on household budgets has not disappeared.

Financial markets expect the Bank of England to leave Bank Rate unchanged at 3.75% at its next monetary policy meeting. Policymakers are still likely to focus closely on wage growth, services inflation and energy costs before deciding how interest rates should move later in the year.

The outlook remains uncertain. Renewed increases in global oil and energy prices could push inflation higher again if they feed through to transport, business and household costs.

The latest figures show that price pressures eased during June, but inflation is likely to remain uneven over the coming months, particularly if energy prices continue to rise.