# UK inflation eases to 15-month low in June after food and fuel prices fall

By Sarah Coles — 2026-07-22

UK inflation fell to the lowest rate in 15 months in June as food and fuel prices dropped in an early boost to the cost-of-living-focused Andy Burnham.

The rate of Consumer Prices Index (CPI) was 2.6 per cent in June, down from 2.8 per cent in May, according to the Office for National Statistics (ONS).

This was the lowest level since March 2025, and also came in below the 2.7 per cent rate that most economists had been expecting.

The lower-than-expected CPI rate is set to provide some relief to new Prime Minister Mr Burnham who has made efforts to ease the cost of living a top priority.

Sarah Coles, head of personal finance at AJ Bell, said: “June’s inflation figure is a bit of a crowd-pleaser, but there’s bad news lurking in the wings.

“Inflation fell very slightly in June, as the Iran peace agreement brought oil prices lower during the month, easing costs at the pump.

“Unfortunately, the fragility of the deal has seen this trend go into reverse in July, so this is likely to be a relatively short-lived phenomenon.

“It’s also set to be exacerbated by the energy price cap hike at the start of this month, so the pain of inflation is far from over.

“At least for now there was good news on fuel prices. The first fall in petrol prices since the start of the Iran conflict was welcome relief, although it’s worth highlighting that fuel prices are still over a fifth more expensive than a year earlier.

“There was also some good news on food prices, which rose 1.7 per cent overall – down from 2.2 per cent a month earlier.

“This is despite the fact that production and manufacturing prices have been rising and is a reflection of the hard bargains supermarkets are driving with their suppliers in an effort to keep prices low and sales robust.

“There were some notable price drops in there, including pizza and quiche prices down 6.7 per cent in a year, butter down 6.6 per cent, flour down 5.1 per cent, jam, marmalade and honey down 3.7 per cent and cheese and curd down 3.2 per cent.

“However, retailers haven’t been able to sit on every price rise, so there were still some notable hikes, including fresh fish prices up 9.1 per cent in a year, mineral water up 8.2 per cent, confectionary up 6.4 per cent, lamb up 6.3 per cent, and pasta and couscous up 6.1 per cent.

“There’s still the threat that higher input prices could feed through onto more of the supermarket shelves in the coming months too, so we could see more horrors to come at the tills this year.

“The summer sales also played a part in keeping inflation under control, with heavier discounting on more clothes and shoes than a year earlier. Prices were actually lower than in June last year, so we filled our summer suitcases for less.

“What this means for savers and borrowers? There’s a silver lining for savers, because the market is convinced that the Bank of England may need to raise interest rates to fight inflation, which tends to support savings rates.

“The markets are still only expecting a single rate hike by the end of 2026, but it’s expected to hit in September, with another potentially following in February.

“When rate expectations rise, swap rates rise, so fixed savings rates tend to do so too. However, the savings market moves slowly, and the shift in expectations has been relatively recent, so we’re yet to see much movement.

“Rates are robust though, offering 4.9 per cent if you fix for one year, 4.85 per cent if you fix for three, and 4.93 per cent over five. The market is also particularly competitive right now, with an unusual number of banks jostling for market share.

“It means the most generous rates are likely to edge up. If you’re in the market for a new savings account, it’s worth keeping your eye open for a bargain and acting fast while it lasts.

“There’s miserable news for anyone in the market for a new mortgage. Mortgage rates had been falling across the board, but this week has seen them jump significantly, as the markets began to expect earlier rate rises, and swap markets started to price them in.

“It demonstrates how difficult it can be to second-guess where the mortgage market is heading at a time of such uncertainty. It’s why it’s not worth hanging on for rates to hit a magic number, even if the market has been moving in one direction for a while.

“Instead, if you have a remortgage due in the next six months, check if you can agree a deal for your remortgage now.

“If rates fall from here, you can shop around elsewhere, but if they rise again, you’ll have locked in a competitive rate.”

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