Food prices have fallen – but inflation is expected to rise from here

The latest rate of inflation is still above the Bank of England’s 2 percent target, but Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said a rise was unlikely when the Bank meets next week.

“Rates may want to assess the impact of any measures announced by the new prime minister before deciding whether to tighten or tighten policy again,” she said.

She added that rising inflation would be “a more prominent economic headache” for Haley, “squeezing the budget, increasing borrowing costs, and increasing financial market volatility.”

Yael Selfin, chief economist at KPMG, said June’s figure was likely to be the lowest of the year.

High energy bills, bring it on. Offgem price increaseshe said, could make inflation worse again.

Although the effects of the first energy shock have so far been relatively limited, if energy prices persist longer, the second-round effects risk feeding into wages and more broadly into the economy.

Sarah Coles, head of personal finance at AJ Bell, said: “The markets are still expecting just one rate hike at the end of 2026, but that is expected to hit in September, with another likely to follow in February.

“This means very generous rates are on the rise. If you’re in the market for a new savings account, it’s worth keeping your eyes open for deals and acting fast while they last.”

But she added: “There’s sad news for anyone in the market for a new mortgage. Mortgage rates have been falling across the board, but this week saw them jump sharply.”