Inflation falls by more than expected to 7.9%

Inflation in Britain has fallen to 7.9% in the year up to June, according to the Office for National Statistics (ONS).

This is a bigger drop than expected – down from May’s 8.7% – with most analysts forecasting a figure of 8.2% this month.

It is the lowest reading since March 2022, indicating that price rises may finally be slowing down.

ONS chief economist Grant Fitzner said after the announcement: ‘Inflation slowed substantially to its lowest annual rate since March 2022, driven by price drops for motor fuels.

‘Meanwhile, core inflation also fell back after hitting a 30-year high in May. Food price inflation eased slightly this month, although it remains at very high levels.

‘Although costs facing manufacturers remain elevated, especially for construction materials and food items, the pace of growth has fallen across the last year, with the overall cost of raw materials falling for the first time since late 2020.’

Martin Lewis highlighted this has taken a little pressure off the Bank of England, adding there is a chance new mortgage fix rates may ‘ease off a touch’.

But experts have warned the nation is ‘far from being out of the woods’ amid the cost of living crisis.

Adam Bullock, UK director at TopCashback warned that for millions of people, the cost of living is ‘still a crisis’.

‘Inflation may have dropped but with a year-on-year increase of 7.9%, we are far from being out of the woods,’ he added.

‘The dipped average figure, while better than a rise, must not mask the soaring prices we are still seeing every day.

‘Recent ONS figures revealed food and soft drink costs were up 18.4% year-on-year, while the price of flights soared by 20% and the cost of things like live music tickets, toys and package holidays have climbed by nearly 7% year-on-year.

‘These hikes will be a big blow for families in the coming months.’ 

Rishi Sunak, whose favourability plummeted to the lowest level since taking office last week, has pledged to halve inflation by the end of the year.

Despite today’s drop, the consensus among economists is that the prime minister will not fulfill his promise to voters.

This will likely be raised in his weekly grilling by Labour’s Sir Keir Starmer during PMQ’s.

Energy security secretary Grant Shapps said inflation remained ‘far too high’ but that it was ‘moving in the right direction’.

Speaking to Times Radio, he said: ‘It is good to see the inflation figures coming down as much as that.

‘We’ve been doing a lot of things to try to support people through this period of high inflation caused by the shock in energy prices.

‘It is good to see that that is starting to pay dividends with inflation coming down to 7.9%.

‘It is still far too high and a big cost, but nonetheless moving in the right direction now.’

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