Inflation in the UK rose more than anticipated in June, hitting 3.6% – the highest level since January 2024. The increase was driven by rising costs in food, clothing, travel and a smaller-than-usual dip in fuel prices, according to the Office for National Statistics (ONS).

Although average earnings have increased by 5.2% over the past year, many households are still feeling the pinch, especially those on lower incomes. Rising prices for essentials like food and petrol have left some struggling to make ends meet. Rents rose 6.7% in the year to May, while house prices also picked up, climbing 3.9%. Meanwhile, travel costs – including airfares and international rail tickets – contributed significantly to the inflation hike.

Economists had predicted inflation would hold steady at 3.4%, but the unexpected rise has raised questions about whether the Bank of England will cut interest rates as planned in August. Some experts argue that lowering rates now could be premature, while others believe caution will continue to guide the Bank’s decisions.

Savers may face further challenges if interest rates fall. With inflation outpacing average savings returns, financial advisers are urging people to shop around for the best deals to protect their money’s value.