Fresh figures from the Office for National Statistics, published on 22 July, show UK inflation cooling again. The Consumer Prices Index (CPI) rose by 2.6% in the 12 months to June 2026, down from 2.8% in May and the lowest reading since March 2025. The main driver was falling motor fuel prices, which pulled transport costs back.
It is a welcome move in the right direction, but for business owners the picture is a little more nuanced than the headline suggests.
The Bank of England is holding firm
Despite inflation easing, the Bank of England has kept its base rate at 3.75%. At the last meeting in June, two of the nine committee members actually voted to raise it, so there is still pressure in the system rather than a clear path to cuts.
The next decision is due on 30 July, and the expectation is another hold. The Bank also expects inflation to creep back above 3% later in the year, so cheaper borrowing does not look likely any time soon.
What this means for you
For most small and medium businesses, the practical takeaways are these:
- Borrowing stays expensive. If you have finance on a variable rate, or facilities coming up for renewal, plan on rates staying around current levels for the rest of 2026. Build that into your cashflow forecasts rather than banking on a cut.
- Cost pressures are easing, not gone. Softer fuel prices help, but with inflation tipped to rise again toward year end, it is worth reviewing supplier pricing and your own pricing before Q4.
- Cash on deposit is still working harder. With the base rate held, savings and reserve accounts continue to earn a reasonable return. If you are holding surplus cash, make sure it is somewhere sensible.
A good moment to plan ahead
Periods like this, where the direction is uncertain, are exactly when a bit of forward planning pays off. If you would like to talk through how the current rate environment affects your borrowing, cashflow or investment decisions, we are always happy to help.