UK inflation hits 12-month low, faces upside risk from energy prices

UK inflation unexpectedly declined to 2.6% in June, driven by lower fuel and food prices, providing temporary relief. However, analysts widely anticipate this downward trend to reverse in the coming months due to projected increases in energy and fuel costs, posing an upside risk to the inflation outlook. The Bank of England may have temporary flexibility regarding monetary policy, but sustained inflationary pressures are expected.