FX.co ★ UK Inflation Eases More Than Expected

The UK’s annual inflation rate eased to 2.6% in June 2026, down from 2.8% in May and below market expectations of 2.7%. This was the lowest rate since March 2025.

The slowdown was largely driven by weaker transport inflation, which fell to 5.7% from 6.8% in May. The main downward contribution came from motor fuels, especially diesel. The average price of diesel dropped by 10.7 pence per litre between May and June, to 176.4 pence per litre, while petrol prices decreased by 2.1 pence to 155.3 pence per litre.

Food inflation also cooled, falling to 1.7% in June from 2.2% in May, its lowest level since August 2024. The largest downward impact came from sugar, jam, syrups, chocolate, and confectionery.

Inflation eased further in other categories as well, including alcohol and tobacco (2.1% vs. 2.4%). Prices declined for clothing and footwear (-0.5% vs. 0.2%) and for furniture and household goods (-0.2% vs. -0.1%).

On a monthly basis, consumer prices rose 0.1% in June, matching forecasts, after a 0.2% increase in May.