European inflation eases; UK inflation slows further

Eurostat reported that Eurozone consumer‑price inflation fell to 2.8% in June 2026, the weakest rise since March, with core inflation at 2.4% and energy prices up 8.5% year‑on‑year. Price dynamics continued to vary across member states, from a 1% increase in Sweden to a 9.2% rise in Romania; Estonia’s CPI edged up 2.3% mainly on electricity costs while food prices fell. The European Central Bank still projects inflation near 3% for the year, slightly below the zone average.

In the United Kingdom, the Office for National Statistics confirmed that CPI remained at 2.6% in the 12 months to June, the lowest level in 15 months, driven by lower food and fuel prices. The BRC‑NIQ Shop Price Monitor showed shop price inflation dropping to 0.9% year‑on‑year in July, with non‑food price growth at 0.2%, indicating very modest retail price pressure. Analysts say the sustained slowdown could bolster mortgage‑rate confidence and support prospective homebuyers, while the Bank of England is expected to keep interest rates steady as it watches for any rebound from energy, fertilizer or food‑price shocks.

Prime Minister Andy Burnham continues to cite the easing inflation as justification for his cost‑of‑living agenda, including a planned VAT exemption on electricity from October and a £2 bus‑fare cap from January.