PwC comments on the latest ONS July 2025 CPI figures

Commenting on the Office of National Statistics Consumer Price Index for June 2025, Adam Deasy, Economist at PwC, comments:

"Hitting its highest level since January 2024, headline CPI rose to 3.6% to close out the second quarter of 2025, above consensus expectations. This largely reflects movements in more volatile components, such as transport costs, where fuel fell by less than it did from May to June 2024, and air fares saw their largest June rise since 2018. Clothing and footwear, and food prices also contributed to the increase.

“Although this leaves quarterly inflation slightly higher than the Bank of England’s expectations set out in May, wage growth has since fallen some way below the Bank’s expected path and should cool further; with services inflation staying flat at 4.7% in June, this should bring some reassurance that some of the underlying inflationary drivers are on the right track.

“While price growth remains far above target, the UK economy contracting for a second straight month in May means the Bank is likely to look through the volatility in this inflation reading and proceed with a rate cut in August. Tomorrow’s payroll data release, the last major data release before the next MPC meeting, may spark the Bank into action to support an economy that increasingly looks like it needs a lift.”