UK inflation dropped by more than expected in June to 2.6%, in a boost for Andy Burnham’s plans to reduce the cost of living.
The new prime minister has pledged to bring down the cost of living to give households more disposable income and improve the outlook for the economy.
Economists had forecast that the consumer prices index (CPI) would slide to 2.7%, down from 2.8% in May, in response to weaker petrol and transport costs after an unstable truce in the Middle East conflict.
Concerns that the Bank of England could increase interest rates later this month were also expected to ease. Several members of the central bank’s monetary policy committee have said they are worried about inflation running persistently above their 2% target unless they push up interest rates from 3.75%.
June’s fall in the CPI figure indicates that while the conflict in the Middle East raised prices across the economy, supplies of food and energy had remained steady and the overall impact was muted.