Cost pressures remain front and centre as inflation rises to 3.6 per cent - Chamber

Inflation hit its highest for almost a year and a half in June, according to new figures released today.

The Office for National Statistics (ONS) said prices rose by more than expected to 3.6 per cent, the steepest rise in inflation since January 2024.

That marks a rise from the 3.4 per cent rate in May, boosted by higher food prices and a lower drop in fuel prices than this time last year.

Inflation remains much higher than the Bank of England's target rate of 2 per cent, but a cut in the cost of borrowing is still expected at next month's rate-setting meeting.

The pace of price rises affects whether the Bank decides to raise or lower interest rates as higher rates can slow inflation by dampening economic activity.

The faster pace of price rises for June was unexpected, with economists having predicted the inflation rate would stay at 3.4 per cent.

Raj Kandola (pictured), acting deputy chief executive of Greater Birmingham Chambers of Commerce, said: “This morning's results will have made uncomfortable reading for those in Number 11 as inflation reached its highest level since the start of 2024.

“Locally, cost pressures remain front and centre for the majority of businesses as we saw in our latest Quarterly Business Report.

“All eyes will now turn to the Bank of England to see if the same appetite remains to bring down interest rates at the same pace in the coming months.

“The Chancellor used her Mansion House speech to rightly call for regulatory reform to boost growth but she will also need to set out a clear plan to reduce business costs - especially around taxation, international trade and hiring if we are fuel long term growth.”