Inflation shows the rate at which the price of goods and services rises over time
UK inflation fell to 2.6% in June in an early boost for new Prime Minister Andy Burnham.
This is down from the 2.8% that was recorded in May. The Office for National Statistics (ONS) says the fall is down to a drop in fuel prices. Food and clothing prices also went down.
Grant Fitzner, chief economist at the ONS, said: “A fall in motor fuel prices, particularly diesel, helped ease inflation in June.
“Food prices fell this month, driven by products including chocolate, margarine and beef. Clothing prices also fell with the start of summer sales, with bigger discounts than last year.”
But analysts say the relief is likely to be temporary, and are forecasting a jump in inflation in July, after energy bills went up. The Ofgem price cap increased by 13% at the start of this month.
Sanjay Raja, chief UK economist for Deutsche Bank, said: “While we’re nowhere close to the peaks seen during the height of the Iran conflict, the energy disinflation path remains uncertain.“
The latest inflation data comes after Mr Burnham announced a VAT cut on electricity bills from October, plus a £2 bus fare cap from January.
Inflation shows the rate at which the price of goods and services rises over time. For example, if the rate of inflation is 3%, then something that cost £100 last year, would cost £103 now.
When inflation falls, it does not mean that prices have stopped rising – they are just going up more slowly then before.
The Bank of England has a target of 2% inflation and uses interest rates as a way of keeping price rises under control.
