UK Inflation Surpasses Forecasts, Fueling Market Uncertainty

UK inflation accelerated to 3.6% in June, outpacing economist projections of 3.4% and marking a sustained upward trajectory from May's 3.4%. Core inflation—stripping out volatile energy and food prices—climbed to 3.7%, signaling persistent underlying pressures. The Office for National Statistics attributes the surge primarily to motor fuel costs, with food price inflation hitting a 16-month high despite remaining below 2023 peaks.

Bank of England policymakers now face heightened scrutiny as stagnant economic growth collides with stubborn price pressures. A 25-basis-point rate cut in August appears increasingly likely, according to market analysts. "The data leaves Threadneedle Street walking a tightrope," noted PwC's Adam Deasy, suggesting monetary policy may soon pivot to stimulate growth.