As of June 2025, the UK’s annual Consumer Price Index (CPI) inflation rate has risen to 3.6%, up from 3.4% in May. This remains above the Bank of England’s target of 2%.
Key Points on UK Inflation Right Now:
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June 2025 inflation rate: 3.6%
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Food inflation reached 4.5%, the highest since early 2024
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Inflation is expected to rise to 3.7% in September
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The average forecast for Q4 2025 is about 3.2%
Key Data:
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CPI inflation rate (June 2025): 3.6%
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Forecasted inflation rate for Q4 2025: 3.2%
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Peak inflation forecast (September): around 3.7%
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Bank of England interest rate (August 2025): 4%
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Inflation target: 2%
Why is inflation above target?
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Rising transportation and vehicle fuel costs are major drivers of price increases
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Food prices continue to rise sharply
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Core inflation (excluding food and energy) was 3.7% in June
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According to BBC analysis: “Prices haven’t decreased; they are just increasing at a slower rate.”
How is inflation measured in the UK?
Inflation in the UK is mainly measured through the Consumer Price Index (CPI). This index includes the prices of approximately 700 items, which represent the typical costs for UK households.
What impact does inflation have on the economy and daily life?
Inflation affects society in several ways, including:
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Households: Rising prices for food, energy, and housing put significant pressure on budgets
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Savers: Lower returns relative to price growth reduce purchasing power
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Borrowers: Higher interest rates make loans and mortgages more expensive
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Businesses: Increased costs put pressure on profit margins and create pricing uncertainty
With the rise in inflation, it is expected that the inflation rate will remain above 2% for the rest of 2025, gradually decreasing over time.
Next steps to watch:
New CPI data will be released around August 20, 2025. Look out for signs of food price reduction and wage growth. Interest rate policies will depend on changes in inflation trends.
News Summary:
The UK inflation rate rose to 3.6% in June 2025, remaining above the Bank of England’s 2% target. Food inflation increased to 4.5%, and it is expected to reach 3.7% in September. The Bank of England is trying to control inflation by lowering interest rates to 4%, but challenges remain in this path.
