CPI inflation rises to 3.6%

CPI inflation rises to 3.6%

16 Jul 2025

Simeon Willis, Chief Investment Officer, XPS Group, commented: “It has been announced that UK CPI inflation over the 12 months to June increased to 3.6%.

June has historically tended to be a relatively benign month in the year for price increases, but this June prices have crept up, heading in the wrong direction for the Bank of England. From this point, even if prices were to remain static at the current price level, we are still looking well into 2026 before 12 month CPI is close to the Bank of England’s 2% target.

US inflation has also started to pick up, in light of Donald Trump’s tariffs. Whilst domestically, for the US, tariffs are inflationary, for other regional economies, it could well have the opposite effect. There remains considerable scope for the UK to benefit from lower inflation as a consequence of cheaper goods finding their way to the UK in place of the US, although this will take time to feed through.

Longer-term UK inflation expectations have picked up modestly from their low at the start of July, too.  Fortunately for pension schemes and their members, expectations still remain at the lower end of their trading range of the last 3 years, albeit well above the BoE’s 2% target."