In a development that should surprise absolutely no one with a functioning grasp of economics, UK inflation spiked to 3.6% in June 2025, according to the Office for National Statistics (ONS). This marks a jump from May’s 3.4% and a significant leap from December 2024’s 2.5%, cementing the UK’s ongoing struggle with rising prices. Yet, financial pundits and self-proclaimed experts are clutching their pearls, calling this surge “unexpected.” The real shock here isn’t the inflation figure—it’s the collective amnesia of analysts who somehow missed the neon-lit warning signs, particularly those flashing since Chancellor Rachel Reeves’ budget.
Actual vs. Estimated vs. Previous: The Numbers Don’t Lie
The Consumer Prices Index (CPI) inflation rate for June 2025 hit 3.6%, up from 3.4% in both April and May, and a far cry from the 2.5% recorded in December 2024. Economists, in their infinite wisdom, had forecasted inflation would hold steady at 3.4%, a prediction that now looks laughably optimistic. The Bank of England’s own May 2025 forecast expected inflation to climb to 3.5% by Q3, while the Office for Budget Responsibility (OBR) projected a peak of 3.7% around the same period. Both were closer to the mark than the City’s analysts, but even they underestimated the pace of the rise.
Core inflation, which strips out volatile food and energy prices, climbed to 3.7% in June, up from 3.5% in May, signalling persistent underlying pressures. Services inflation, a key metric for the Bank of England, remained stubbornly high at 4.7%. For context, inflation was at a 41-year high of 11.1% in October 2022, and while we’re nowhere near that level, the steady climb from the 2% target is rattling nerves—and wallets.
The Obvious Culprits: Reeves’ Budget and More
Let’s cut through the noise: this inflation spike was as predictable as rain in Manchester. The main drivers are clear, and they’ve been brewing for months, if not years. First, energy and housing costs continue to bite. The ONS highlighted that transport costs, particularly airfares and rail tickets, surged due to smaller-than-expected declines in fuel prices compared to last year. Food prices also rose at a brisk 4.5%, the highest rate since February 2024. Private rents, meanwhile, climbed 6.7% in the year to May, and house prices ticked up by 3.9%. These aren’t random blips—they’re structural pressures exacerbated by policy choices.
Enter Rachel Reeves’ autumn budget, a masterclass in fiscal recklessness. Her £25 billion increase in employers’ National Insurance contributions and a 6.7% hike in the minimum wage from April 2025 have sent shockwaves through businesses. These costs don’t vanish into thin air; they’re passed on to consumers through higher prices. Add to that the Ofgem energy price cap increase of 1.2% in January, with more rises expected in April, and it’s no wonder inflation is climbing. The budget’s tax hikes and borrowing spree have also fuelled domestic inflationary pressures, as businesses grapple with higher costs and a weaker economic outlook.
Then there’s the global context. Donald Trump’s tariff threats, though partially walked back, have rattled markets and raised fears of imported inflation. Supply chain disruptions lingering from the post-COVID era and the Russia-Ukraine conflict continue to keep energy and food prices volatile. These factors aren’t new, yet the “experts” seem perpetually caught off guard.
The “Unexpected” Farce: Experts in Denial
The chorus of financial pundits crying “shock” at these figures is almost comical. The Independent reported that analysts expected a steady 3.4%, while posts on X echoed the same bewildered tone, with one user lamenting the “huge blow” to Reeves as if this wasn’t written on the wall. The Spectator’s Ross Clark nailed it, pinning the 3.5% spike in April squarely on Reeves’ “economically illiterate” policies, yet the broader analyst community seems to have missed the memo.
Let’s be clear: anyone paying attention could see this coming. Reeves’ budget was a textbook recipe for inflation—higher taxes, increased business costs, and a borrowing binge that spooked markets and pushed up gilt yields. The OBR slashed its 2025 growth forecast to 1%, warning of stagflation risks as early as March. Yet, City economists and talking heads act like this 3.6% figure fell from the sky. Did they miss the ONS reports on rising rents? The Ofgem announcements? The minimum wage hike? Apparently so.
The Bank of England, too, deserves a side-eye. Its “gradual and careful” approach to rate cuts now looks like a tightrope walk over a volcano. With inflation climbing, the odds of an August rate cut from 4.25% to 4% are fading, as higher interest rates may be needed to tame prices—bad news for mortgage holders. Yael Selfin of KPMG UK warned that inflation could hit 4% by autumn, a view echoed by the ONS’s Richard Heys, who pointed to persistent tax-driven pressures.
Reeves’ Response: More Spin Than Substance
Chancellor Reeves, ever the optimist, insists her “number one mission” is “putting more pounds in people’s pockets” through growth. In her Mansion House speech, she doubled down on deregulation and investment to “kickstart” the economy. But with the UK teetering on stagflation—low growth paired with high inflation—her promises ring hollow. The economy shrank by 0.3% in April and again in May, and her fiscal policies are squeezing households and businesses alike. Shadow Chancellor Mel Stride called her budget “economic vandalism,” and for once, the hyperbole isn’t far off.
Reeves’ claim that she’s fighting the cost-of-living crisis is hard to swallow when her policies are directly fuelling it. The Lib Dems’ Ed Davey warned of a “new era of stagflation,” and even Treasury Minister James Murray admitted families are “still finding it hard to make ends meet.” Yet, the government’s response is to double down on spending plans with a razor-thin £9.9 billion surplus projected by the OBR—hardly a buffer if growth stalls further.
The Road Ahead: No Easy Fixes
This inflation spike isn’t a one-off; it’s a symptom of deeper systemic issues. The UK’s economy is caught in a vice of high costs, weak growth, and policy missteps. While Reeves talks up growth, the reality is that businesses are passing on higher costs, households are stretched by rising rents and bills, and the Bank of England is stuck between a rock and a hard place. The 2% inflation target looks increasingly like a distant dream, with forecasts suggesting a peak of 4% later this year.
The pundits’ surprise at these figures is a damning indictment of their tunnel vision. When you raise taxes, hike wages, and ignore global pressures, inflation doesn’t just creep up—it gallops. Instead of feigning shock, these experts should be asking why they didn’t see it coming. The answer? They’re too busy reading their own headlines to notice the real world. For UK households, the cost of this oversight is measured in higher bills, pricier groceries, and fading hopes of relief. Reeves may want “more pounds in pockets,” but right now, those pounds are buying less every day.
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