Rising food and motor fuel costs push UK core inflation to 3.6% in June 2025, higher than expected. CPIH, including housing costs, rises to 4.1%. Economy shows poor GDP performance, with 0.1% fall in May. Inflation now exceeds savings account rates, raising fears of stagflation. Bank of England faces tough decisions on monetary policy. Markets rise despite negative news, FTSE 100 hits record high.

Fuel and food prices drive inflation increase. Transport prices up 1.7% annually, with petrol prices falling slightly. Food costs rise 4.5% in June, highest since February 2024. Inflation surpasses interest rates on savings accounts. Average cash account rate at 3.51%, lower than 3.6% inflation rate. Savers urged to find better deals amid eroding value of savings.

Investors and savers face challenges as inflation outpaces interest rates. Bank of England may struggle to lower rates further. Inflation spike due to energy price changes, expected to ease. UK equity markets at all-time highs, with potential for lower inflation and interest rate cuts boosting investor confidence. Morningstar suggests Bank of England has room to maneuver despite elevated inflation.

Read more at Morningstar: Food And Fuel Drive UK Inflation Higher Than Expected in June