THE UK’s rate of inflation has dropped more than expected to 7.9% in June this year.
The Consumer Price Index level of inflation decreased from 8.7% in May, according to the Office for National Statistics (ONS).
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Inflation is a measure of how the price of goods and services has changed over the past year.
The ONS said falling prices of motor fuel led to the biggest contribution to the change in inflation.
While food prices did rise in June, they increased by less compared to June 2022.
However, core CPI inflation, which excludes energy, food, alcohol and tobacco, rose by 6.4% in the last year leading up to June.
That’s a slight drop from 6.5% in May which was the highest rate for more than 30 years.
ONS chief economist Grant Fitzner said: “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.”
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Inflation has eased slightly in recent months since the eye-watering 11.1% seen in October, which was driven by soaring gas and electricity prices.
It slowed to 10.1% in March, then again further to 8.7% in April.
But despite the figures slowing, it still means the prices of everyday essentials are rising more than the BoE would like, which has a 2% target for inflation.
Also commenting on today’s figures, Chancellor of the Exchequer Jeremy Hunt said: “Inflation is falling and stands at its lowest level since last March; but we aren’t complacent and know that high prices are still a huge worry for families and businesses.
“The best and only way we can ease this pressure and get our economy growing again is by sticking to the plan to halve inflation this year.”
While energy secretary Grant Shapps added: “It is good to see the inflation figures coming down as much as that.
“It is still far too high and a big cost, but nonetheless moving in the right direction now.”
What it means for your money
A drop in inflation usually means that prices are dropping, but only ever so slightly – people will still be feeling the pinch.
Adam Bullock, UK director at TopCashback said that while inflation has dropped, we are “far from being out of the woods”.
“The dipped average figure, while better than a rise, mustn’t mask the soaring prices we’re 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.”
High inflation means the cost of everyday essentials, like food and energy are rising, meaning your money doesn’t go as far.
The BoE, the UK’s central bank, can hike what’s known as its base rate to try and bring it down.
While it means people with savings see a boost, it also means interest rates on mortgages rise as well, piling pressure on homeowners.
The Bank of England has been criticised for being wrong with its inflation projections previously.
It had said inflation would drop to 1% by 2024 — but now it is set to hit 3.4%.
Last month, the central bank hiked interest rates to 4.5% – their highest level in 15 years.
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