Clothing and footwear offsets rising prices as UK inflation hold steady in June

UK inflation held steady in June as price rises across the country stayed at the Bank of England’s target level for the second month running, according to official figures.

The rate of Consumer Prices Index (CPI) inflation remained unchanged at 2%, the Office for National Statistics (ONS) said.

It means that prices are still rising but at a rate that the central bank is comfortable with, after nearly three years of above-target inflation fuelling the cost-of-living crisis.

June’s rate came in slightly ahead of expectations, as some analysts were predicting it to dip below target to 1.9%.

The latest data showed that prices in restaurants and hotels rose more than a year ago, putting upward pressure on the headline inflation rate. It also showed that the costs of package holidays, cinemas, theatres and concerts were rising.

But prices of clothing and footwear fell last month, which helped bring down the overall rate. Three items making particularly strong downward contributions were women’s sportswear shorts, women’s exercise leggings and girl’s fashion tops.

Food and drink inflation also dropped sharply from the highs of recent years, coming in at a rate of 1.5% in June. At one stage it reached nearly 20%, in March 2023, as households faced much higher prices in supermarkets and restaurants.

Services CPI inflation – which looks only at services-related categories like hospitality and culture and is watched closely by the Bank’s interest rate-setters – was unchanged at 5.7% in June.

This could present a problem for the Bank after some economists had been expecting the rate to slow last month.

June’s official inflation data is the first to be released since the UK welcomed a new Government at the beginning of this month.

Chief Secretary to the Treasury Darren Jones said: "It is welcome that inflation is at target, but we know that for families across Britain prices remain high. We face the legacy of 14 years of chaos and economic irresponsibility.

"That is why this Government is taking the tough decisions now to fix the foundations so we can rebuild Britain and make every part of Britain better off."