Bank of England Holds at 3.75% as Inflation Heads Back Up: What Hourly Employers Should Do Now

Key Takeaways

• What it means: The Monetary Policy Committee (MPC) held Bank Rate at 3.75%, signalling a cautious "wait and see" stance as inflation cools but is forecast to climb again by Q4.

• Who it affects: Employers managing hourly teams face continued cost pressure from National Insurance rises and above-target inflation, with no borrowing relief.

• What to do next: Review your rota efficiency and labour cost forecasting now, before a potential Q3 policy shift changes the equation.

On 18 June, 2026, the Bank of England's MPC held Bank Rate at 3.75%. Consumer Prices Index (CPI) inflation came in at 2.8% in April, down from 3.3% in March. But the MPC's own forecasts show it climbing back to 3.3% or higher by Q4, and the Iran conflict continues to inject uncertainty into energy and food prices.

For businesses running shift-based teams, the hold doesn't remove cost pressure. National Insurance rises and above-target inflation are still compressing margins, and how you plan rotas, control labour costs, and retain hourly workers through 2026 matters more than ever.

Why the MPC held rates in June

The April CPI reading of 2.8% gave the committee breathing room. The Ofgem energy price cap drove that drop, pulling housing and household services inflation from 5.3% down to 1.4%.

Don't let that cooldown fool you. The Bank of England Monetary Policy Report, April 2026 projects CPI rising back to 3.3% in Q3, with food price inflation potentially reaching 6% to 7% by year-end. The Iran conflict's impact on global energy supply chains hasn't fully passed through yet.

The vote split tells the story. Eight members voted to hold, while one dissented in favour of raising rates to 4.0%.

Governor Andrew Bailey himself sends mixed signals: in April, he says the MPC is "in no rush" to raise rates. By 3 June, 2026, he warns that the MPC "cannot wait for hard evidence" of second-round inflation effects before acting.

Meanwhile, the labour market is softening. Unemployment rose to 5.0% in the January to March quarter, payrolled employees fell by 104,000 year-on-year, and regular wage growth slowed to 3.4%, the weakest pace since 2020. Real wage growth, adjusted for inflation, sits at just 0.1%.

What a hold means for businesses managing hourly teams

Borrowing costs stay where they are. That means no immediate relief if you're carrying variable-rate debt, but no new pressure either.

The real squeeze comes from layered cost increases. The National Insurance contribution rises that took effect in April 2025 haven't gone away, and the National Living Wage increased to £12.71 from April 2026.

Real-time workforce data from over 100,000 UK shifts shows retail hourly wages rising from approximately £10 to £11 in early 2022 to £12 to £13 by 2025, largely tracking these policy-driven wage floors.

With real wages essentially flat at 0.1% growth, your team members aren't seeing meaningful pay rises in real terms. That makes shift flexibility and reliable rota planning even more important for keeping people engaged. The same workforce data shows retail hiring has stabilised in the 4% to 7% range, meaning employers are holding onto existing staff rather than expanding headcount.

Operational precision is the lever you can actually pull. Demand-based staffing can help businesses better align planned labour with expected demand, which may reduce the risk of overstaffing or understaffing. Tracking actual hours worked against planned hours surfaces overtime patterns before they hit your payroll.

How to use the rate hold to sharpen your workforce data

A rate hold gives you a window to act. The MPC is watching the same data you are: inflation trajectory, wage growth, and consumer spending. You can act on your own workforce numbers right now.

Start with your rota. AI Forecasting tools can help support rota planning by analysing demand signals and historical workforce data. Forecasts are predictive and should be independently reviewed and validated before being used to make staffing decisions. Pair that with time and attendance tracking, and you get a clear picture of actual versus planned hours, making it easier to spot cost overruns before your next pay run.

Deputy's forecasting capabilities are designed to support workforce planning. Forecasts and recommendations are assistive outputs and should be reviewed by managers before implementation.

What to do now

• Audit your rota efficiency. Match planned hours against actual footfall and sales data to spot overstaffing and overtime patterns.

• Track actual versus planned hours. Use time and attendance data to surface cost overruns before your next pay run.

• Build rotas from demand signals. Replace guesswork with forecasting tools that staff your business to what it actually needs.

• Watch the Q2 CPI data. The figures, expected in July, will signal whether the inflation cooldown holds or reverses ahead of the 6 August MPC decision.

Sharpening your view of labour spend gives you a direct path to controlling the costs within your reach. Try Deputy for free and see how demand-based rota planning and forecasting tools can support workforce planning and labour cost visibility during periods of economic uncertainty.