Economy
Lower fuel prices help drive inflation down to 2.6%
- The June figure was down from 2.8% in the year to May, the Office for National Statistics (ONS) said.
- Food prices also fell, driven by cheaper goods such as chocolate, beef and margarine.
- Food and non-alcoholic beverage prices fell by 0.2% month-to-month, with sugar, chocolate and confectionery seeing the largest drop in price.
Prices rose by 2.6% in the year to June, down from 2.8% in the year to May, the Office for National Statistics (ONS) said. The June figure was down from 2.8% in the year to May, the Office for National Statistics (ONS) said. Food prices also fell, driven by cheaper goods such as chocolate, beef and margarine.
ONS chief economist Grant Fitzner said: "A fall in motor fuel prices, particularly diesel, helped ease inflation in June. The price of clothes also fell, he said, due to start-of-summer sales which had bigger discounts than last year. Food and non-alcoholic beverage prices fell by 0.2% month-to-month, with sugar, chocolate and confectionery seeing the largest drop in price.
Meat and vegetable prices rose in June but the increase was smaller than the same time last year. Prices of oils, fats and dairy fell in June, compared to a year previously. Food inflation often has a lag of up to 13 months due to the supply chain, so any effects from the war in Iran could still be yet to come.
Fuel prices at the pump fell in June after the US and Iran agreed to halt military operations and allow the key Strait of Hormuz to re-open. But the recent resumption of hostilities and a new jump in crude oil prices means inflation could spike again in the coming months. Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said the June inflation figure is a "false dawn".
Higher energy bills, brought about by a rise in Ofgem's price cap, will likely push inflation up again, she said. "Elevated inflation will likely become a more notable economic headache for the new Chancellor in the coming months by deepening the cost‑of‑living crunch, while also squeezing his fiscal headroom, raising borrowing costs, and increasing financial market volatility. But she said the June figures "quash any lingering prospect" of an increase to the Bank of England's interest rate in July. 'I can't afford to turn the oven on': 7.4m households struggling to buy essentials VAT to be cut from household electricity bills in October.
Source: BBC Business