The latest inflation figure is still above the Bank of England’s target of 2%, but Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said a rate increase when the Bank meets next week is unlikely.
“Rate-setters may want to assess the impact of any measures announced by the new Prime Minister before deciding whether to tighten policy again,” she said.
She added that rising inflation will “likely become a more notable economic headache” for Healey, “squeezing his fiscal headroom, raising borrowing costs, and increasing financial market volatility”.
Yael Selfin, KPMG’s chief economist, said the June figure is likely to be the lowest of the year.
Higher energy bills, brought about by a rise in Ofgem’s price cap, will likely push inflation up again, she said.
“Although the impacts from the initial energy shock have so far been relatively limited, if energy prices remain high for longer, second-round effects risk feeding through into wages and more broadly across the economy.”
Sarah Coles, head of personal finance at AJ Bell, said: “The markets are still only expecting a single rate hike by the end of 2026, but it’s expected to hit in September, with another potentially following in February.
“It means the most generous rates are likely to edge up. If you’re in the market for a new savings account, it’s worth keeping your eye open for a bargain and acting fast while it lasts.”
But she added: “There’s miserable news for anyone in the market for a new mortgage. Mortgage rates had been falling across the board, but this week has seen them jump significantly.”