The rate of inflation hit a 15-month low in June, in a potential boost for household finances and housing affordability.

The latest data from the Office for National Statistics (ONS) shows the Consumer Prices Index (CPI) rose by 2.6% in the 12 months to June 2026, down from 2.8% the previous month.

It matches the 12-month rate of 2.6% in March 2025 and it was last lower in December 2024, when it was 2.5%.

On a monthly basis, CPI rose by 0.1% in June 2026, compared with a rise of 0.3% in June 2025.

Household affordability remains under pressure.

Transport, and food and non-alcoholic beverages made the largest downward contributions to the inflation rate.

But there are fears that the rate of inflation could rise again the coming months once the higher energy price cap is factored in.

TEMPORARY RELIEF

Victoria Scholar, Head of Investment at interactive investor, says: “Although the new Chancellor John Healey said this is the ‘news families want to hear’, the data could represent the calm before the storm.

“Inflation is expected to rise again in next month’s data partly because of July’s 13% increase in the Ofgem energy price cap alongside the backdrop of resurgent Middle East tensions with US-Iran military strikes that have pushed Brent crude back above $90.

“Measures from the new Prime Minister Andy Burnham to tackle the cost-of-living such as the VAT cut on electricity bills and the cap on most bus fares could help to ease inflation in the near-term by contributing to lower, more affordable prices for consumers in the economy. However crucially, the inflationary impact longer-term depends on how the government funds these measures. Relying on borrowing could have an upward inflationary impact, while increasing taxes or cutting spending elsewhere would help offset this.”

Nathan Emerson, Chief Executive of Propertymark, says: “While it’s encouraging to see inflation move closer to the Bank of England’s 2%, household affordability remains under pressure.

“Renewed international political tensions could still impact the wider economy, particularly over the summer months. Although the figures mark a third consecutive fall, many households will likely continue to approach their finances with caution as not to overstretch their levels of incomings vs outgoings on key household items moving forward.”

Ben Thompson, Director of Home Moving Strategy at the Mortgage Advice Bureau, says: “Inflation ticking down is a reminder that in today’s geopolitical climate, mortgage rates don’t stay predictable for long.

“This drop puts the Bank of England’s next move back in the spotlight – albeit we currently expect no further increase to the base rate, as domestic economic performance still remains weak.

“Whether you’re a first time buyer or a remortgager coming off a cheaper fixed deal, it’s worth exploring options sooner rather than waiting later to see what happens. For both groups, locking in a rate you’re comfortable with now is often a smarter move than waiting on the chance of a better one later.”