UK inflation remained steady in June despite a significant rise in hotel prices, according to the latest official figures. While prices in restaurants and hotels increased, sharp declines in clothing costs, driven by widespread retailer sales, helped offset these gains.

Overall, inflation held at 2% for the year to June, unchanged from May. This indicates that the cost of living continues to rise, but at a rate the central bank deems acceptable after nearly three years of above-target inflation that has strained household finances.

The latest data revealed that prices in restaurants and hotels were higher than a year ago, exerting upward pressure on the headline inflation rate. Hotel prices surged by 8.8% compared to the previous month, while restaurant and cafe prices saw a modest monthly increase of 0.3%. Additionally, costs for package holidays, cinemas, theatres, and concerts also rose.

Conversely, prices for clothing and footwear fell last month, and food and drink inflation dropped sharply from the peaks of recent years. The figures released on Wednesday also showed that second-hand car costs declined, albeit by less than the same period last year.

However, price increases in areas like services, which include everything from restaurants to hairdressers, remain persistent. This could prompt questions for Bank of England policymakers about when to start cutting interest rates.

Darren Jones, the new Chief Secretary to the Treasury, noted that family budgets across Britain are still being squeezed. He stated, “We face the legacy of 14 years of chaos and economic irresponsibility. That is why this government is taking tough decisions now to fix the foundations so we can rebuild Britain and make every part of Britain better off.”

The Bank’s base rate, which influences mortgage rates and other borrowing costs, is currently at a 16-year-high of 5.25% after being increased to combat soaring inflation. The Monetary Policy Committee (MPC), which sets the rate, has maintained it at this level for several months. However, some economists predict a rate cut at the next vote on 1 August.

Leanne Morgan and her husband Gareth, who bought their house in Greenwich, south-east London, in 2016 when interest rates were much lower, have been affected by these changes. Their five-year fixed mortgage deal ended this month, and their new rate stands at just over 4%, increasing their mortgage payments by £5,200 a year.

Mrs. Morgan mentioned that the higher mortgage payments had limited activities for their three older children. “We can’t have family holidays, and we’ve not been able to do as much with the children. It affects where I shop for food; I’m always looking for discounts. We sit together, look at our costs, see where we can cut back, and make a budget.”

She remains optimistic, however, believing the UK economy is past its worst phase and that better times are ahead. “I think the doom and gloom can make us feel very negative and hopeless,” she said. “But if we focus on what is possible and work with what we’ve got, we can have a better conversation about it.”

According to the latest data, the underlying measures of inflation closely watched by the Bank of England remained unchanged. Inflation in the services sector stayed at 5.7%, while core inflation, excluding volatile items like energy prices, held at 3.5%.

Recent stronger economic figures may influence the Bank of England committee’s decision on interest rates next month. On Tuesday, the International Monetary Fund listed the UK among countries that might need to keep interest rates “higher for even longer” than originally anticipated to reduce inflation.

Markets have been expecting rate cuts starting on 1 August, which would help reduce fixed mortgage rates. The latest inflation figures suggest the decision will be finely balanced.