UK Inflation Drops to 15-Month Low Amid Fuel and Food Price Cuts

UK inflation has dropped to its lowest rate in 15 months, according to data released by the Office for National Statistics (ONS). The Consumer Prices Index (CPI) inflation rate fell to 2.6% in June, down from 2.8% in May.

The decrease is largely attributed to a drop in fuel and food prices. Average petrol prices declined by 2.1p per litre between May and June, while diesel prices dropped by 10.7p per litre. This marks the first time petrol prices have eased since the US-Israel war with Iran at the end of February.

However, experts warn that June's inflation reading may be a low point before price rises speed up again over the rest of the year. The Ofgem price cap increased by 13% in July, meaning the typical household's gas and electricity bill will increase by £221 to £1,862 a year.

Economists are predicting inflation to peak at around 3.25% towards the end of 2026, according to the Bank of England's latest forecasts. The energy market remains volatile and swayed by developments in the Middle East, which could lead to further price increases.