Inflation falls sharply to 6.8% from 7.9%, new data shows: What it means for you
16 August 2023, 07:05 | Updated: 16 August 2023, 08:39
Inflation has fallen sharply to 6.8% in the year to July - down from 7.9% in June.
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It means prices are still rising, and increasing at a rate above the desired 2% mark, but they are going up at a slower rate than before.
The news follows a record rise in wages which heaped more pressure on the Bank of England to tackle inflation, which it has been doing with interest rate rises.
The fall has been partly put down to a decrease in energy prices which spiked after Russia invaded Ukraine.
The new figures for the Consumer Prices Index were released by the Office for National Statistics (ONS) on Wednesday morning.
Matthew Corder, ONS deputy director of prices, said: "Inflation slowed markedly for the second consecutive month, driven by falls in the price of gas and electricity as the reduction in the energy price cap came into effect.
"Although remaining high, food price inflation has also eased again, particularly for milk, bread and cereal.
"Core inflation was unchanged in July, with the falling cost of goods offset by higher service prices."
The biggest contributions to inflation rises were hotel and air travel, the ONS said.
Rishi Sunak has pledged to help halve inflation by the end of the year, having made the promise when it stood at 10.1%.
"As Prime Minister I am determined to build a better economy and a better country for you, your children and your grandchildren," he said on Wednesday.
"That starts with tackling inflation. And the news this morning shows that the plan is working.
"If we stick to the plan I've set out, we'll get it done."
Chancellor of the Exchequer Jeremy Hunt said: "The decisive action we've taken to tackle inflation is working, and the rate now stands at its lowest level since February last year.
"But while price rises are slowing, we're not at the finish line.
"We must stick to our plan to halve inflation this year and get it back to the 2% target as soon as possible."
Labour's shadow chancellor Rachel Reeves said that "inflation in Britain remains high and higher than many other major economies".
"After 13 years of economic chaos and incompetence under the Conservatives, working people are worse off - with higher energy bills and prices in the shops.
"Labour's plan to build a strong economy will make working people better off by boosting growth, improving living standards and cutting household bills."
It comes after data showed an average salary growth of 7.8% in the three months to June 2023 was significantly above City expectations.
The ONS said it was "the highest regular annual growth rate we have seen since comparable records began in 2001."
But the pay increase may spark inflation anxiety in the Bank of England, whose economists are concerned about a wage-price spiral.
