Lowest inflation rate for a year brings some relief to struggling families - but 7.9% still 'far too high'

19 July 2023, 07:17 | Updated: 19 July 2023, 08:23

The inflation rate has fallen more than expected
The inflation rate has fallen more than expected. Picture: Alamy/ONS

By Will Taylor

The rate of inflation has dropped to 7.9% in the year up to June - a bigger than expected slow down in price rises.

Listen to this article

Loading audio...

That is a fall from 8.7% in May, using the consumer price index, a method for measuring how fast prices are going up.

While it is still far ahead of pre-pandemic and war in Ukraine levels, the rate of growth is slower than the 8.2% predicted by some forecasters.

Speaking on Wednesday morning as the data was released, the Office for National Statistics' (ONS) chief economist said drops in motor fuel prices brought about the "substantial" slowdown.

Grant Fitzner said this was the lowest annual rate of inflation since March 2022. That was the first month after Ukraine was invaded and sent energy prices soaring.

Read more: Jaguar Land Rover to create thousands of jobs with UK electric battery 'giga-factory'

Food price inflation has also eased but it remains "at very high levels", he added.

The ONS said he largest downward trend in the rate of increase was in milk, cheese and eggs, easing from 22.8% from 27.4% in May. Rises in the cost of meat products - mostly pork - as well as bread and cereals slowed slightly.

The ONS data shows inflation fell to 7.9%
The ONS data shows inflation fell to 7.9%. Picture: Office for National Statistics

Rishi Sunak pledged to halve inflation as one of his key policy priorities after becoming prime minister. At that time, it was above 10%.

Chancellor 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."

Jeremy Hunt welcomed the news but admitted high prices are still a worry
Jeremy Hunt welcomed the news but admitted high prices are still a worry. Picture: Alamy

Read more: Bank of England 'losing control of inflation' as food costs heap economic misery on Brits

Grant Shapps, the energy secretary, said the government's measures to support Brits through inflation are "starting to pay dividends with inflation coming down to 7.9 percent".

But he admitted: "It is still far too high and a big cost, but nonetheless moving in the right direction now."

Shadow chancellor Rachel Reeves said: "Inflation has been persistently high and remains higher than our international peers. This is becoming a hallmark of Tory economic failure.

Markets commentator David Buik on inflation falling to 7.9% in June

"Today's numbers confirm what families across the country already know - that prices are still going up at staggering rates and that they're bearing the brunt of those costs.

"There may be global shocks - but Britain is so exposed to those because of Tory economic failure that has led to a severe lack of security in our economy.

"Only Labour has the plans Britain needs to put our economy on a more secure path - so that families are better off and so we can grab hold of the opportunities of the future."

Attention will now turn to what impact this has on the Bank of England's interest rate rises next month. It increased it by 0.5% to 5% in June.

Financial markets forecast it could climb to 6.25% by March next year.

Samuel Tombs, chief economist at the Pantheon Macroeconomics consultancy, said today's figures were a "watershed moment", and showed the Bank it could opt for a lesser 0.25% rates rise.

He said he expects a sharp fall in food inflation in the third quarter of the year.

More Latest News

See more More Latest News

US President Donald Trump holds a chart as he delivers remarks on reciprocal tariffs during an event in the Rose Garden entitled "Make America Wealthy Again"

'Liberation Day' explained: What are Trump's tariffs and how will they impact the UK?

The blurry thieves stole £3,000 worth of cigarettes and vapes.

Police release CCTV after thieves steal £3,000 of vapes - but images leave the public calling for 'the ghostbusters'

Julie Goodyear

Julie Goodyear's husband shares rare photo of Coronation Street star two years on from dementia diagnosis

: An aerial view shows the scorched graveyard around a church following a large blaze the previous day, on July 20, 2022 in Wennington, Greater London

Londoners urged not to have barbecues this weekend amid soaring temperatures 'because of wildfire risk'

Lord Sugar labels Trump tariffs 'a disaster' as Apprentice star teases potential US Presidential meeting

Lord Sugar labels Trump tariffs 'a disaster' - as Apprentice star teases potential US Presidential meeting

Mother and two children struck and killed by a vehicle in Brooklyn, New York: driver operating suspended license

Husband left 'utterly bereft' after Brit mum and two daughters killed in New York car crash

The Nintendo Switch 2 will release on June 5, 2025

Nintendo Switch 2: Exciting reveal, but why is it more expensive here?

BRITAIN-FUNERAL-POLICE

Funeral director charged with 64 offences including fraud, theft and preventing 30 lawful burials

swallow-tail

Brits urged to 'stop mowing lawns' amid 'national butterfly crisis' with more than half of species in decline

Kyle Kitchen, 38, murdered eight-week-old Primose Kane

Dad who murdered daughter by violently shaking her as baby is jailed for life

Buildings that were destroyed during the Israeli ground and air operations in Gaza

Israel expands ground attack on Gaza to seize 'large areas' - despite pleas from hostage families

Douglas Clifton Brown, 56, tried to kill his estranged wife

Old Etonian who tried to murder his estranged partner by throwing her down a 240ft well is jailed for 24 years

Kaliyah Coa, 11, was reportedly down at the water when she was 'swept away'

Pictured: Missing 11-year-old 'swept away' while paddling in the River Thames

Hot cross buns could be scarce this Easter as farmers continue to protest against Rachel Reeves' 'tractor tax'.

Hot cross bun shortage looms as farmers escalate 'tractor tax' protests

Tanesha Melbourne-Blake was shot

Teenage girl shot dead during gang 'ride-out' following social media humiliation

Mother and two children struck and killed by a vehicle in Brooklyn, New York: driver operating suspended license

Brit mum and daughters, eight and five, killed in crash by driver who said 'I have the devil in me'