The risk is that a hotter-than-expected June inflation report — one that Fed Chair Jerome Powell recently called among the most important for assessing the impact of tariffs — could slow the pace at which the central bank lowers interest rates. Importantly, that could also throw a wrench into the stock market’s record-setting rally.

Home prices and the cost of rent are rising more slowly, helping to offset any tariff-related increase in inflation.

The pick-up in inflation was driven by higher prices for petrol, airfares and rail tickets, the ONS said.