Business

Inflation falls back by more than forecast to 15-month low

Food price inflation eased slightly this month, although it remains at very high levels (Julien Behal/PA)
Food price inflation eased slightly this month, although it remains at very high levels (Julien Behal/PA) Food price inflation eased slightly this month, although it remains at very high levels (Julien Behal/PA)

Inflation has eased by more than expected to its lowest level for 15 months in a sign that price rises may finally be slowing down.

The Office for National Statistics (ONS) said Consumer Prices Index inflation was 7.9% in June, down from 8.7% in May and its lowest rate since March 2022.

Most economists had expected the rate of inflation to fall to 8.2% in June.

The ONS said falling fuel prices was the biggest driver behind the drop, while food price inflation also pared back to 17.3% from 18.7% in May, though still painfully high.

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.

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“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.”