UK inflation is expected to have risen by 0.1% in June 2025, reaching 3.5% over the last 12 months. The Bank of England plans to hold rates until inflation decreases. The UK economy underperformed in May, and the government is facing pressure due to price increases and taxation.

The Bank of England warned of rising inflation, attributing it to energy and services price hikes, as well as the government’s increase in National Insurance contributions. The bank predicts inflation will remain high this year before gradually falling towards the 2% target next year, impacting interest rates.

UK equity markets may react negatively to the rising inflation data. Bond investors are closely monitoring the situation amid concerns about the Chancellor’s spending plans and fiscal rules. Investors are wary of potential tax increases, signaling a cautious approach in the financial markets.

Read more at Morningstar: What to Expect From June’s Data