The UK’s inflation rate fell to 2.0% in June 2025, marking the first time it has returned to the Bank of England’s official target since July 2021. This significant milestone follows months of declining price growth, driven largely by slower increases in food and energy costs. The drop in inflation is expected to ease financial strain on households and may influence the Bank of England’s decision to cut interest rates in the coming months.
Economists suggest the cooling inflation could signal a turning point for the UK economy, which has been grappling with high living costs and stagnant real wage growth. However, policymakers remain cautious, noting that while prices are stabilizing, underlying pressures—especially in the services sector—could keep inflation elevated longer than expected. Any upcoming rate adjustments will likely hinge on sustained moderation across more sectors.
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