Image source, EPA

The UK's inflation rate has risen to 3.6% in the year to June, up from 3.4% in May, according to the Office for National Statistics - higher than economists had expected.

The unexpected inflation jump was mainly driven by motor fuel costs - which did not fall as much as they did this time last year - and food price inflation, which rose for the third month in a row.

Despite the rise, our business correspondent writes the Bank of England is "still widely expected to cut interest rates later" - here's how inflation impacts interest rates.

The rate prompted reaction from politicians, businesses and people across the UK:

• Chancellor Rachel Reeves said "there is more to do" and she is determined to "deliver on our Plan for Change to put more money into people’s pockets"
• Shadow chancellor Mel Stride said the rise in inflation is "deeply worrying for families" before blaming Labour for its decision to "tax jobs and ramp up borrowing"
• The chief UK economist at Capital Economics said the UK still has an "inflation problem" while economics director at the Institute of Chartered Accountants in England and Wales warned the recent rate rise is the "start of a slight summer surge in inflation"
• A grocery business in Northern Ireland warned there will be "no respite for the consumer" as the author of a low-cost recipe book said it is no longer possible to feed the family for £20 a week

We're ending our live coverage but you can stay across this story on BBC News.

Tom Espiner
Business reporter

The Bank of England is still widely expected to cut interest rates later in the summer, despite the unexpected jump in inflation figures. Let's take a look what links the inflation rate and interest rate together:

One of the Bank of England's main jobs is to try to hold inflation at 2%, and the way it does this is by altering interest rates.

Raising rates is supposed to lower inflation, while dropping them boosts how quickly prices rise.

The way the Bank sets interest rates is by changing how much it charges banks to borrow money, and how much interest it pays them on deposits.

If that base rate is high, it costs banks more to borrow money. Those charges are then passed onto consumers, making loans like mortgages more expensive.

This means people have less money to spend, so price rises are meant to slow down.

The Bank of England governor Andrew Bailey has said that, if the jobs market shows signs of slowing down, the Bank is prepared to make larger cuts to interest rates.

As a reminder: Interest is the amount you get charged to borrow money. So if you get charged 10% on a £10 loan over a year, you end up paying back £11 - that's £10 plus £1 interest.

Image source, Getty Images

The author behind the 2020 recipe book, Feed Your Family For £20 a Week, tells BBC Radio 5 Live Breakfast it's no longer possible after the latest inflation rate.

“You’re not feeding your family for £20 these days," says Lorna Cooper. “It used to be people needed help to get through a tough spot, the odd month.

“Increasingly now it’s every month. There’s nowhere to go. There’s not enough money to get to the end of the month to pay everything and buy your food."

Cooper also estimated a £160 shopping list in a book she wrote in 2019, with basic items that could cover you for eight weeks, would cost 71% more today - at £272.38.

"It’s a big jump," she says. “I don’t know anyone whose wages have increased by 71%."

The Bank of England cut rates from 4.5% to 4.25% in May - the fourth cut it's made in the past year. This comes after the rate stood at a recent peak of 5.25%.

Interest rates were held at 4.25% in June, though governor Andrew Bailey indicated further "gradual and careful" cuts could follow - perhaps as early as August.

But Bailey also warned that US President Donald Trump’s recent introduction of tariffs on imports from around the world has shown "how unpredictable the global economy can be".

The Bank now expects Trump's global tariff regime to slow the UK economy, making inflation more unpredictable.

It predicted in May that inflation would spike at 3.7% in 2025 before dropping back down.

Tom Espiner
Business reporter

Image source, Getty Images

Food price rises, along with energy, tend to be the ones that people notice hitting them the most - mainly because many of them are pretty unavoidable.

The pace of food and non-alcoholic drink price rises was 4.5% in the year to June - the highest rate since February 2024.

This ratcheting up of the rate comes after a steep spike in price rises that started in June 2021 and peaked in June 2023, before falling off again.

In June, bread and cereals - particularly cakes - were up, along with meat, and milk, cheese and eggs - mainly cheddar cheese.

The rise in June was part of a "concerning trend in 2025" says Balwinder Dhoot, director of sustainability and growth at the Food and Drink Federation.

“The pressure on food and drink manufacturers continues to build," he says.

"With many key ingredients like chocolate, butter, coffee, beef, and lamb climbing in price – alongside high energy and labour expenses – these rising costs are gradually making their way into the prices shoppers pay at the tills."

Clodagh Rice
Northern Ireland business correspondent

A grocery business in Northern Ireland warns there will be "no respite for the consumer" as it expects food prices will remain “stubbornly high” this year.

The Henderson Group employs almost 6,000 people across Northern Ireland. Its chief financial officer, Neil Gamble, says he expects the food inflation rate could still increase later this year.

"We think we are going to see that trend of rising prices continue, which is a real disappointment to us. We could see that trend going as far as 5% between now and the end of the year."

Tom Espiner
Business reporter

The surprising thing about the latest inflation rate is how “sticky” it is, says Paul Dales, chief UK economist at Capital Economics.

“The UK does still have an inflation problem,” he tells BBC Radio 4's Today programme. “Over the last six to nine months, a lot of that has been due to energy effects, and food effects as well.”

That is “quite hard for households, because it’s really quite hard to avoid buying those items,” he says.

Inflation is one set of figures the Bank of England looks at when deciding on interest rates movements.

Dales says the Bank is likely to continue to cut interest rates, but at a slower pace.

Image source, Getty Images

Cost pressures on households and businesses remain "disconcertingly high" and the latest rate rise may signal the start of a "slight summer surge" in inflation, the Institute of Chartered Accountants in England and Wales (ICAEW) says.

Suren Thiru, ICAEW's economics director, says "rising fuel and food prices helped drag inflation further away from the Bank of England’s 2% target".

The director adds that June's inflation rate rise is the "start of a slight summer surge in inflation", as he warns of "skyrocketing business costs and global trade turbulence likely to lift the headline rate moderately higher by the autumn, despite July’s drop in energy bills".

Tom Espiner
Business reporter

Image source, Getty Images

The pace of price rises in June was the steepest rise since January 2024, the Office for National Statistics says.

It was driven by motor fuel price rises, which only fell slightly, compared with a much larger decrease at this time last year, the ONS says.

The price of Brent crude futures, which is one of the benchmarks for oil prices, rose steeply in June due to the conflict between Iran and Israel, before falling off later in the month after a ceasefire between the countries.

Theo Leggett
Business correspondent

Well, that was a bit more than we expected.

Inflation, as measured by the Consumer Price Index (CPI), rose 3.6% in June. That compares to 3.4% in May. A noticeable jump.

Food price inflation rose for the third month in succession. Bad news for people struggling to make ends meet, as food is something you can’t really cut back on.

Transport costs were a big factor. Interestingly, fuel prices actually fell, but not by as much as they did this time last year – so they weren’t offsetting rises elsewhere. Complicated, but it has affected the figures.

Looking at the big picture - the Bank of England is still widely expected to cut interest rates later in the summer, but officials there might be starting to feel ever so slightly nervous.

Image source, PA Media

Shadow chancellor Mel Stride says the rise in inflation is "deeply worrying for families" and "well above" the Bank of England's 2% target.

"Labour’s decision to tax jobs and ramp up borrowing is killing growth and stoking inflation – making every day essentials more expensive," he writes on X.

He says the government are "too weak to take tough choices on spending" and says "more tax rises are on the way, leaving families facing ever-rising costs".

Image source, EPA/Shutterstock

Chancellor Rachel Reeves has just reacted to the unexpected jump in the inflation rate to 3.6%.

She says she knows "working people are still struggling with the cost of living".

"That is why we have already taken action by increasing the national minimum wage for three million workers, rolling out free breakfast clubs in every primary school and extending the £3 bus fare cap," she says.

The chancellor admits "there is more to do" but she is "determined we deliver on our Plan for Change to put more money into people’s pockets".

Image source, EPA

Food price inflation has risen for the third month in a row to its highest annual rate since February last year, the Office for National Statistics says.

However, the ONS's acting chief economist Richard Heys says the rate still remains "well below" the peak seen in early 2023.

He adds that overall inflation had been driven up mainly by fuel prices, which dropped only slightly, compared with a much larger fall this time last year.

Tom Espiner
Business reporter

There are always factors pushing up inflation, and always things dragging it back down.

The pace of price rises in June was pushed up by petrol and diesel prices - while they are less expensive than they were a year ago, the price fell only slightly between May and June this year, compared to a larger fall in the same month last year.

An increase in other transport costs, such as air fares and train fares, and rises in clothing and footwear prices also contributed to higher inflation.

It's important to bear in mind that inflation is how quickly prices are rising – so inflation of 3.6% means prices are that much higher compared with June last year.

This is still quite a lot higher than the Bank of England’s 2% target.

Inflation has risen to 3.6% in the year to June, up from 3.4% in May, according to the Office for National Statistics.

We'll bring you more on the latest ONS release- and what this means for you - shortly. Stick with us.

Theo Leggett
Business correspondent

Image source, Getty Images

The inflation figures for June will be published shortly, so what can we expect?

We’ll be focusing on the Consumer Prices Index (CPI) - the rate at which the prices of the goods and services bought by households rise or fall.

Analysts believe it will show that prices rose by 3.4%, or possibly 3.5%, in the year to the end of June.

That would be the same, or slightly higher, than what we saw in May and still well above the Bank of England's 2% target.

The Bank has previously blamed increases in regulated prices – particularly for energy – for pushing the inflation figure upwards earlier this year. It said last month it expects CPI to remain “broadly at current rates” through the remainder of the year, before falling in 2026.

Most economists expect the Bank to cut interest rates on 6 August, reducing them from their current level of 4.25%.

Earlier this week, the Bank's governor, Andrew Bailey, said he believed interest rates were on a gradual downward path – but hinted at larger cuts if the job market showed signs of slowing down.

It would take quite a shock in the figures to be published today for the Bank to be diverted from that path.

Image source, Reuters

As we wait for the latest inflation figure, let's take a look at Chancellor Rachel Reeves's speech last night on savings.

In a statement yesterday, Reeves told the financial industry it must change the "negative" narrative around savers investing money in stocks and shares in order to help grow the economy.

Last week, it was revealed that Reeves had shelved immediate plans to reduce the allowance for cash Individual Savings Accounts (Isas).

The chancellor wants some of the £300bn in Isas to be invested in the UK and its companies.

At the annual Mansion House dinner in the City of London, she told business leaders: "Our tangled system of financial advice and guidance has meant that people cannot get the right support to make decisions for themselves."

Under government plans, savers with cash in low-interest accounts will be targeted from next year with offers to invest their money in stocks and shares instead.

More on this story.

Connie Bowker
Business reporter

I have spoken to Saul, a tutor who says he has noticed that prices in supermarkets have risen significantly.

He says olive oil is among the items he's noticed that has become rapidly more expensive, and more items in the supermarket are behind the counter and have a security tag to prevent theft.

"I feel like people talk more and more about basic amenities suddenly being extortionate and olive oil being fancy," he says.

Saul also tells me he has cut back on "indulgence" purchases, such as coffee and alcohol, which he says is "a sign of where we are".

"I feel like it creates a very different culture when it costs so much more to have one drink.

"It means people don’t go out the same way or socialise in the same way."

Last month, the Office for National Statistics (ONS) said inflation held at 3.4% in the year to May - the same figure released for April.

The ONS said transport costs were the largest downward contribution to inflation in May, with that being offset by upward contributions coming from food, furniture and household goods - leaving us back at the 3.4% figure.

April's inflation rate was initially published as 3.5%, but the Office for National Statistics later said an error in some tax data it received meant the rate should have been a touch lower at 3.4%.

The ONS only revises its official rate in exceptional circumstances, so the figure for the year to April still appears as 3.5% on its website.

Image source, Bloomberg via Getty Images

Each month we report on the inflation rate because it is one several important pieces of data that tell us how the UK economy is performing.

Inflation is a measure of how quickly prices are rising for goods and services. A good example of this is if a bottle of milk costs £1 but is £1.05 a year later, then annual milk inflation is 5%.

The Bank of England says a series of shocks to the economy has contributed to high inflation figures in recent years.

First, the Covid pandemic pushed prices up as more people bought goods - but there were problems getting enough of the goods, particularly those imported from abroad.

Second, the war in Ukraine led to large increases in the price of gas and food.

Then, a big fall in the number of people available to work meant employers began offering higher wages to job applicants, with many businesses increasing their prices to cover these costs.

It is important to understand that even if the inflation rate falls, it does not mean prices are falling - it just means the pace at which they are rising has slowed.

You can read more on how inflation is calculated here.