Burnham Gets Brief Inflation Reprieve Before Energy Price Cap Bites

The UK inflation rate is expected to have eased in June, providing temporary relief for Andy Burnham's incoming government. According to economists, a sharp drop in petrol and diesel prices will have contributed to the decrease in the Consumer Prices Index (CPI) inflation rate from 2.6% in May to 2.4% in June.

The average price of a litre of diesel at UK forecourts dropped by more than 16p from the start to the end of June, the largest decline since records began in 2000. This was driven by news of an interim ceasefire deal between the US and Iran, which prompted oil prices to fall below pre-crisis levels.

Economists also expect inflation across the UK's services industry to have slowed in June, although live music events like Harry Styles and Take That concerts may have pushed prices up in certain places. Household energy inflation is expected to have taken a step down last month, but this relief will be short-lived as Ofgem's new energy price cap took effect at the beginning of July.

The new cap was up by 13% compared to the previous rates, meaning the typical household's gas and electricity bill will increase by £221 to £1,862 a year. Experts caution that tensions in the Middle East have flared up again and Brent crude oil prices have been rising during July.