Why is UK inflation still rising?
Summary
Prices in the UK increased by 3.6% in the year up to June 2025, mostly due to higher costs of food and fuel. The Bank of England aims to control inflation, keeping it at a 2% target by adjusting interest rates. Despite recent reductions in interest rates, inflation is still rising due to various factors like energy and food prices.Key Facts
- Prices in the UK rose by 3.6% in the year leading up to June 2025.
- The Bank of England tries to keep inflation at a 2% target by changing interest rates.
- Inflation peaked at 11.1% in October 2022, the highest rate in 40 years.
- The Consumer Prices Index (CPI) measures inflation and was 3.6% in June 2025.
- Core inflation, which excludes food and energy, rose to 3.7%.
- Food prices alone went up by 4.5% in the year to June 2025.
- Fuel prices decreased slightly in 2025 compared to a larger drop in 2024.
- Higher interest rates can slow inflation by making borrowing more expensive, reducing spending.
- The Bank of England plans to gradually cut interest rates and may do so again in August.
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