UK inflation climbs unexpectedly as pressure mounts on chancellor

Office for National Statistics (ONS) data showed the consumer price index rose by 3.6% last month, compared to a 3.4% jump in May, despite experts predicting that inflation would remain flat.

The unexpected increase in inflation comes as Labour faces increasing scrutiny over its management of the economy, following two months of stagnant growth and mounting speculation that it will raise taxes at the autumn Budget.

Inflationary rises in June were pushed up by petrol and diesel prices, while house prices also rose steeply.

The jump from May to June was the steepest rise in inflation measured by the ONS since January 2024 and was well ahead of the Bank of England’s target of 2%.

Reeves sought to shrug off the UK’s stuttering growth in a speech to the City at Mansion House this week, saying she would slash red tape in a bid to reboot economic growth.

However, she has faced fresh criticism from the retail sector this week, after it was reported over the weekend that she was planning to add a business rates surcharge on larger premises for grocers and department stores in a bid to raise an extra £1.7bn.

Marks & Spencer has publicly led the charge against the proposed changes, warning it could lead to shop closures and job losses.

“Given larger retailers are often anchor tenants on the high street, taxing them to support smaller stores is a false economy,” M&S said. “If larger shops close, smaller shops suffer.

“The proposed reforms could therefore accelerate the decline of the high street by encouraging retailers to close larger high street stores”.

Other large retailers such as Asda, Primark, Tesco, Sainsbury’s, Morrisons and Kingfisher have also criticised the proposals.