Burnham's Early Boost: UK Inflation Hits 15-Month Low
UK inflation fell to its lowest level in 15 months, providing an early boost for new Prime Minister Andy Burnham. The rate of inflation decreased from 2.8% in May to 2.6% in June, which is lower than the expected 2.7% forecast by most economists.
The Office for National Statistics (ONS) attributed the decline to a drop in fuel and food prices. Diesel prices fell by 10.7p per liter between May and June, while petrol dropped by 2.1p per liter. The inflation rate for food and non-alcoholic beverages also decreased from 2.2% to 1.7%, driven by lower costs of products such as chocolate, margarine, and beef.
Additionally, clothing prices fell due to retailers launching their summer sales with bigger discounts than last year. However, analysts caution that the relief is likely to be temporary, as inflation is forecast to rise again in July following a 13% increase in the Ofgem energy price cap at the start of this month.
Newly appointed Chancellor John Healey emphasized that falling inflation is welcome news for families but acknowledged that there is still much work to be done. To address the cost of living, the government has announced a VAT cut on electricity bills from October and a £2 bus fare cap from January.