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UK Inflation 2026: What Is Driving Prices and When Will It Normalise

Headline inflation is near target but services inflation remains sticky. Here is what is happening to UK prices.
National Herald UK
Education Desk
Education Desk
Education Published April 8, 2026 · 2:05 AM Updated June 25, 2026 · 7:34 PM 1 min read
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UK CPI inflation has returned to close to the Bank of England's 2% target. But the headline figure masks significant variation across different categories.

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The Headline Numbers

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CPI: 2.3%, marginally above target. CPIH (including housing costs): 3.1%. RPI: 4.2%, still used for student loan interest and some index-linked bonds.

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What Is Still Rising

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**Services:** 4.1% inflation reflecting domestic wage pressure. Services are labour-intensive and wages remain above the rate consistent with 2% inflation.

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**Rents:** Private sector rents rising at approximately 8% per year in London, 6-7% nationally.

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**Food:** 26% higher than before the 2021-23 crisis. The rate has slowed but the level has not reversed.

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What Has Fallen

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Energy prices below their peaks. Global goods prices eased as supply chains normalised. New car prices falling with EV availability increasing.

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The Outlook

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Bank of England central forecast: inflation around 2-2.5% through 2026. Main risks are wage growth feeding into services prices and any renewed energy shock.

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