In June 2023 food prices in the United Kingdom were 17.3 percent higher than the previous year, while housing and energy costs were 12 percent higher. This month, prices increased to some degree in every sector, with the exception of transportation, where prices fell by 1.8 percent.
Consumer prices, as measured by the Consumer Prices Index (CPI), were 7.9% higher in June 2023 than the previous year, down from 8.7% in May. However, the June figure came in below economists’ forecasts of 8.2%.
Inflation drop expected
The combination of several factors including falling energy prices and easing global cost pressures, are expected to bring down the UK’s annual inflation rate during 2023.
According to the Office for National Statistics, 60% of adults in Great Britain reported an increase in their cost of living in June-July 2023 compared to a month ago.
The Bank of England has been raising interest rates to try and get the inflation rate back to its 2% target. They have increased from 0.1% in December 2021 to 5.0% in June 2023. The results of the bank’s next policy meeting will be announced on 3 August, where a further increase is expected.
High rates have led to higher household borrowing costs, notably in mortgage interest rates. The Bank of England estimates that around half of mortgages held by owners who live in their properties (4 million) will be exposed to higher rates in 2023.
