Inflation in the UK exceeded expectations

Annual inflation rate in The United Kingdom reached 3.6% in June, exceeding economists' estimates, according to data published by the Office for National Statistics (ONS), as reported by CNBC.

Economists polled by Reuters had forecast inflation of 3.4% for the 12 months ended in June, which is in line with the level recorded in May. Core inflation, which does not take into account volatile energy, food, alcohol and tobacco prices, rose to 3.7% in June from 3.5% in May.

Immediately after the publication of the data, the British pound strengthened by almost 0.2% against the dollar, reaching $ 1.3406.

"Inflation rose in June, mainly due to fuel prices, which decreased slightly compared to a much more pronounced drop in the same period last year," explained Richard Hayes, acting chief economist at ONS.

"Food inflation has been rising for the third month in a row, reaching the highest annual level since February last year. Nevertheless, it remains well below the peak value recorded at the beginning of 2023," he added.

UK Finance Minister Rachel Reeves reacted, saying that the data confirms that "people still face difficulties related to the cost of living." Reeves also stressed that the government still has work to do to reduce pressure on consumers. The Bank of England is closely monitoring these indicators against the backdrop of continuing high inflation and a sluggish economy. Central banks usually maintain high interest rates during periods of inflation to stimulate savings and restrain consumption, thereby restraining price increases.