What was the UK's inflation rate in June, and how did it compare to expectations and the previous month?

The UK's inflation rate fell to 2.6% in June, down from 2.8% in May — a larger decline than economists had forecast, which predicted a drop only to 2.7%. This decrease was driven primarily by falling fuel prices (especially diesel), lower clothing costs due to summer sales with bigger discounts than last year, and reduced food prices for items including chocolate, margarine, and beef. The Office for National Statistics also noted a dip in raw material costs — the first since January — largely due to lower crude oil prices, and a continued slowdown in factory-gate price increases.

What immediate cost-of-living measures did the new government announce in response to the inflation drop?

In response to the inflation drop, the new chancellor, John Healey, announced two key cost-of-living measures: a winter VAT cut on electricity bills and a £2 cap on bus fares in England starting from January. He described the inflation data as 'news families want to hear' but stressed that more action is needed to give households 'the breathing space they need', framing these policies as central to the government’s first-week priorities and its commitment to supporting working people.

UK Inflation Falls by More Than Expected to 2.6%, Boosting Andy Burnham

Jul 22, 2026

UK inflation dropped to 2.6% in June, driven by lower fuel and food prices. Raw material costs decreased due to lower crude oil prices, while the government announced VAT cuts on electricity bills.

theguardian

2026-07-20

UK Prime Minister Burnham Targets Lower Energy Bills with VAT Cut

2026-07-22

UK Inflation Falls by More Than Expected to 2.6%, Boosting Andy Burnham

2026-07-22

Ditching 'Net Zero' to Win the Climate Argument

UK Inflation Falls by More Than Expected to 2.6%, Boosting Andy Burnham

FAQ