17 June 2026
If you are covering the latest UK inflation figures from the Office for National Statistics, please find below a comment from Lindsay James, investment strategist at Quilter:
“After inflation surprisingly dropped below 3% last month, it has managed to keep pace at the same rate, 2.8%, surprising the market which expected it to bounce back. While the war in the Middle East is over, for now, and normality can supposedly resume, inflation has managed to hold steady, though the likelihood is that it won’t suddenly start falling for a number of months. As a result, today’s figure is a pleasant surprise.
“Going forward, the picture looks more complicated. The energy price cap will rise 13% from July as a result of elevated oil and gas prices, so the benefits of the US-Iran resolution will not be immediately felt. Indeed, food prices are likely to see greater impact from higher costs of production as the cost and availability of fertiliser, energy and transportation remains restricted until the Strait of Hormuz is fully opened again. Meanwhile, there are increasing concerns we are likely to see the most powerful El Nino weather system on record in the months ahead, which has the potential to ruin crops and harvests.
“Despite the good news on inflation, the Bank of England is expected to retain interest rates at 3.75% when it meets on Thursday. With growth already experiencing headwinds from higher oil prices, the problem of inflation in this situation will be resolved not by a rate rise but by an easing of supply chains. With the Middle East situation looking somewhat calmer, that can hopefully take rate rises off the table. But to avoid such a situation happening again, the government needs to act swiftly to decouple the UK from the harshest impacts of such events.”
