UK inflation unexpectedly rises to highest since January 2024

Britain's annual rate of consumer price inflation unexpectedly rose to its highest in over a year at 3.6 per cent in June, official figures showed on Wednesday, potentially making it a tougher call for the Bank of England to cut interest rates next month.

- 

June's reading from the Office for National Statistics (ONS) took the annual CPI rate to its highest since January 2024.

British inflation has risen steadily since touching a three-year low of 1.7 per cent last September, and in May the Bank of England forecast it would peak at 3.7 per cent in September - almost twice the central bank's 2 per cent target.

Higher costs for motor fuels, air fares and rail fares were the biggest contributor to the rise in the inflation rate between May and June, the ONS said.

Meanwhile Britain's economy contracted unexpectedly for a second month running in May, official data showed, compounding worries at home for finance minister Rachel Reeves as the nation navigates growing global turbulence.

Gross domestic product shrank by O.I per cent after a 0.3 per cent drop in April, the Office for National Statistics said.

Economists polled by Reuters had mostly forecast that gross domestic product would rise by O.I per cent from April's level. And while the services sector eked out a sliver of growth, declines in industrial output and construction dragged down overall output.

Following a growth surge early in the year, Britain's economy could now be facing flat or weaker growth than previously expected for the April-to-June period, economists said.