UK inflation slowed in June, with the Consumer Prices Index (CPI) rising by 2.6% in the 12 months to June 2026, down from 2.8% in May according to the Office for National Statistics (ONS).
The rate was last lower in December 2024, when it stood at 2.5%. On a monthly basis, CPI rose by 0.1% in June, compared with a rise of 0.3% in June 2025.
Transport, food and non-alcoholic beverages made the largest downward contributions to the change in the annual rate. Prices in the transport division rose by 5.7% in the 12 months to June, down from 6.8% the previous month.
Motor fuels drove the decrease in the rate. The average price of diesel dropped by 10.7 pence per litre between May and June, against a fall of 0.6 pence a year earlier, taking it to 176.4 pence per litre. Petrol fell by 2.1 pence to 155.3 pence per litre, the first easing since the conflict in the Middle East began on 28 February 2026.
Food and non-alcoholic beverage prices rose by 1.7% over the year, down from 2.2% in May and the lowest rate since August 2024. Clothing and footwear prices fell by 0.5% over the year, having risen by 0.2% in the 12 months to May, as summer discounting ran deeper than last year.
Grant Fitzner, Chief Economist at the ONS, commented: "A fall in motor fuel prices, particularly diesel, helped ease inflation in June. Food prices fell this month, driven by products including chocolate, margarine and beef. Clothing prices also fell with the start of summer sales, with bigger discounts than last year."
On the wider picture, he added: "The cost of raw materials dipped for the first time since January, mainly due to the lower price of crude oil, while the increase in the costs of goods leaving factories slowed again."
Core CPI, which strips out energy, food, alcohol and tobacco, held at 2.6%. Services inflation eased to 3.6% from 3.7%.
Inflation trajectory still uncertain
Much of June's fall came from fuel and summer discounting, both of which could reverse given ongoing geopolitical uncertainty. Core inflation held at 2.6% and services inflation at 3.6%, so the underlying pressure has not gone away.
That distinction matters more than the headline figure for anyone thinking about longer-term returns. With inflation above the Bank of England's 2% target, cash held on deposit continues to lose buying power in real terms unless the rate paid keeps pace. The Bank’s Monetary Policy Committee (MPC) is due to report its latest interest rate decision on 30 July.
Inflation figures also feed into anything linked to CPI, including some pension and benefit uprating and the annual increases applied to certain guaranteed retirement income.
A single month's data is not a reason to change course. If you are unsure what these figures mean for your longer-term finances, get in touch to talk it through.