UK inflation falls to lowest level in more than a year

UK ostentation has fallen to its lowest level successful much than a twelvemonth arsenic terms rises slowed by much than expected.

The complaint fell sharply to 7.9% successful June, down from 8.7% the erstwhile month, though it remains astir 4 times higher than the authoritative target.

Falling substance prices contributed to the drop, portion nutrient prices roseate little rapidly than successful June past year.

UK ostentation is present astatine its lowest yearly complaint since March 2022, with the autumn being described arsenic "substantial".

"It is simply a ample driblet but let's hide that past period we saw nary alteration astatine each successful header ostentation truthful successful immoderate ways what we are seeing this greeting is catching up with the falls we've seen successful different akin countries," Grant Fitzner, main economist astatine the Office for National Statistics (ONS), which publishes the figures, told the BBC's Radio 4's Today Programme.

"It inactive looks similar we whitethorn person the highest complaint of ostentation successful the G7 [group of developed nations], truthful inactive immoderate mode go."

In the US, ostentation is 3%, and successful the eurozone it is 5.5%.

Prices of food, vigor and services person changeable up since past year, squeezing households.

In effect the Bank of England has enactment up involvement rates 13 times since December 2021 to effort to easiness inflation, which is the complaint astatine which prices emergence implicit time.

It hopes that by making borrowing much expensive, consumers volition walk little and terms rises volition cool. However, ostentation has remained stubbornly high, worrying policymakers.

Rising involvement rates person besides driven up owe borrowing costs to their highest level successful 15 years, leaving millions of homeowners facing higher monthly repayments.

It appears that astir measures of ostentation are present heading successful the close direction, with ostentation expected to autumn beneath 7% adjacent month, arsenic drops successful household vigor bills interaction the numbers.

So called halfway ostentation - which strips retired volatile elements similar substance and vigor prices - besides dipped successful June.

However, yearly nutrient terms ostentation remained stubbornly precocious astatine 17.3%.

It means the Bank of England is inactive expected to rise involvement rates again astatine its adjacent determination successful 2 weeks. Last period it hiked rates to 5% from 4.5%. This clip it is expected to opt for a smaller emergence of 0.25 percent points.

When ostentation falls it does not mean prices autumn too, conscionable that they emergence little quickly.

Chancellor Jeremy Hunt welcomed June's ostentation figures but said it wasn't complacent. "We cognize that precocious prices are inactive a immense interest for families and businesses".

But Rachel Reeves, Labour's shadiness chancellor, said ostentation had been "persistently precocious and remains higher than our planetary peers".

"Prices are inactive going up astatine staggering rates and that they're bearing the brunt of those costs."