London Daily

Focus on the big picture.
Tuesday, Jun 30, 2026

Why is UK inflation higher than other countries?

Why is UK inflation higher than other countries?

The UK's inflation rate jumped unexpectedly last month with the cost of living rising faster here than in most of the world's advanced economies.

Price rises rose by 10.4% in the year to February, in contrast to the US and the Eurozone where inflation has eased to 6% and 8.5% respectively.

Inflation is volatile and reading too much into one month's figures would be a mistake, however, the UK's inflation rate has been persistently higher on average compared to the US and other large economies in Europe over the past year.

With the cost of living continuing to eat away at household budgets - many are starting to ask: Does the UK have its own inflation problem?

We look at three factors driving up prices:


1. Food price rises


One of the main drivers of February's inflation rise was the price of food in the UK continuing to surge.

Food inflation was up 18.2% last month compared to the same time a year earlier, with salad and vegetable shortages driving the latest rises in costs for customers.

Tomatoes, peppers and cucumbers have been some of the goods in short supply largely due to extreme weather in Spain and North Africa hitting harvests. In the winter, the UK imports a lot of such produce from abroad.


The shortages have also been compounded by high energy prices in the UK leading to vegetable growers and farmers cutting down on crop yields or avoiding producing certain foods at all due to rising running costs, according to Minette Batters, president of the National Farmers Union (NFU).

She says its a "it's a very complex picture" but all of the union's surveys of growers show that businesses are contracting and the more the sector shrinks "the less there is, the rationing comes in and that just drives further food inflation".

Farmers have also argued that retailers and supermarkets are not paying a fair price for them for their produce, and the government's food tsar has said supermarkets having "fixed-price contracts" with suppliers means when food is scarce, some producers opt to sell less to the UK and more elsewhere in Europe.


2. Wholesale gas prices


Energy bills have risen globally since Russia invaded Ukraine. However, the impact felt in the UK by higher gas prices has been harder for households and businesses than their counterparts in other advanced economies.

Analysts say the UK is more exposed to rises in the prices of wholesale gas.

Jonathan Haskel, a member of the Bank of England's Monetary Policy Committee which decides on interest rates, has said previously the UK appeared to be one of the "most susceptible" countries to energy price shocks.

He cited the UK being a bigger user of gas to heat homes and keep lights on than other European countries. He also added that gas was transferred mostly via pipelines from a handful of suppliers, whereas the US produced most of its own gas and relied more on Liquefied Natural Gas (LNG).

Taxes being lower on electricity and gas paid by UK consumers compared to their European neighbours meant when wholesale gas prices rise, UK energy bills "would be expected" to go up more than others, he said.

On the upside, this means bills should fall more quickly when the wholesale prices come down, as they are expected to in the coming months.

Martin Beck, chief economic adviser to consultancy the EY Item Club, says February's rise is a "flash in the pan".

"Things will improve quickly - it's bad news today," he adds.


3. Worker shortages and wage rises


The energy price shock is a major driver of the prolonged high inflation in the UK, but it's not the only cause with the UK also having a major worker shortage.

During the pandemic, all major countries saw their workforce shrink.

But while most leading economies have since recovered, the UK still has about 400,000 more people not working than in December 2019.

A study by the think tanks Centre for European Reform and UK in a Changing Europe suggests there are 330,000 fewer workers in the UK as a result of Brexit, with sectors such as transport, hospitality and retail have been particularly hard hit.


Other reasons include young people opting to study rather than work, older people retiring early, and more people being off work due to long-term sickness.

The shortage of workers has helped drive up pay packets with employers shelling out more to attract and retain staff.

Many supermarkets have given staff several pay rises as they battle to find workers.

Bank of England governor Andrew Baily warned workers asking for pay rises last year, saying it could push inflation out of control, though unions argue they are required to cope with the rising cost of living.

Experts are still predicting price rises to slow in the coming months, but if the UK gets more surprises like February's and high inflation persists, more questions will emerge of why the UK is an outlier.

Newsletter

Related Articles

0:00
0:00
Close
UK Crime and Policing Act 2026 Comes into Force with New Justice System Reforms
UK Prime Minister Hosts NATO Secretary General Mark Rutte for Security Talks at Downing Street
UK Tightens Oversight of Emissions Trading Scheme Through New Ministerial Directions
UK Issues Statement at UN Security Council on Violence in the West Bank
UK Environment Agency Clears Illegal Waste Site in West Yorkshire After Court Action
UK Resident Sentenced for Fraudulently Claiming £30,000 in Covid Business Loans
UK Launches Taskforce to Help Young People Claim Dormant Child Trust Fund Savings
UK Gambling Commission Fines Betfred Operator Petfre Gibraltar £900,000 Over Social Responsibility Failures
UK Appoints Lord Collins as Global Envoy for LGBT+ Rights
UK Expands Detention Capacity to Support Removal of Foreign Criminals and Failed Asylum Seekers
UK Resident Doctors End Strike Action After Accepting Government Pay Deal
UK Tightens Sentencing for Domestic Killings with 25-Year Starting Point for Murder of Partners
UK to Build at Least Six New Royal Navy Warships Under Expanded Defence Programme
UK Government Unveils £5 Billion Defence Investment Plan Focused on Drones and Autonomous Warfare Systems
UK Economy Records 0.6% First Quarter Growth as Services and Manufacturing Drive Steady Expansion
Welsh Government Unveils New Agricultural Support Plan Focused on Sustainability and Rural Growth
UK Teacher Recruitment Shortfalls Continue in Science and STEM Subjects
Police Scotland Expands Cybercrime Investigations Amid Rising Digital Fraud
UK Universities Warn of Risk to International Student Numbers Amid Visa Changes
UK Defence Ministry Pivots Toward Greater Domestic Military Procurement
UK Launches National Rail Review After Repeated Service Disruptions
Northern Ireland Assembly Debates Long-Term Funding Settlement for Public Services
UK Accelerates Approval of North Sea Offshore Wind Projects to Expand Energy Capacity
UK Retail Sales Fall as Households Cut Discretionary Spending in June
UK Expands Border Intelligence Cooperation with France and Belgium to Target Smuggling Networks
Scottish Government Faces Pressure Over Delays in Major Infrastructure and Transport Projects
UK Launches Multi-Billion-Pound Artificial Intelligence Infrastructure Investment Fund
National Health Service Warns of Continued Emergency Department Strain Across England
Bank of England Signals Interest Rate Hold as Wage Growth Keeps Inflation Elevated
UK Sets Emergency Fiscal Strategy as Inflation Pressures and Weak Manufacturing Growth Persist
UK Launches New Measures to Improve Safety Standards in Night-Time Venues
UK Tightens Import Rules for Low-Value Parcels to Support Domestic Retailers
UK Launches £85 Million Obesity Care Programme Targeting Early Intervention Projects
UK Commits Up to $26 Million to Ebola Response in Democratic Republic of Congo
Security Industry Authority Flags Safety Failures in Night-Time Economy Inspections
Cambridge South Railway Station Opens After £250 Million Investment
UK Moves to Close Import Duty Loophole for Small Parcels by 2028
UK Invests £85 Million in Projects to Transform Obesity Care
Berkeley Group Warns London Housebuilding Falling Far Short of Demand
UK Council Tax Arrears Rise to £9.3 Billion Amid Ongoing Household Financial Strain
Markets Watch Political Transition as Andy Burnham Emerges as Labour Leadership Frontrunner
Extreme Heat Raises Long-Term Risks for UK Inflation and Productivity, Analysts Warn
UK Health Alerts Extended as Record June Heatwave Grips England
UK Parliament Faces High-Stakes Week of Spending, Security and Industrial Legislation
UK Repeals Vagrancy Act Ending Criminalisation of Rough Sleeping in England and Wales
GB News Pundit Charged With Fraud Over Alleged Conduct as Former Labour Adviser
Reform UK Gains Parliamentary Visibility in First Senedd Opposition Appearance
Metropolitan Police Arrest Man on Suspicion of Attempted Murder After London Car Incident
Ocado Chief Executive Tim Steiner Faces Scrutiny Over £100 Million Remuneration Package
British Chambers of Commerce Downgrades UK Growth Outlook to 0.9 Percent for 2026
×