Britain’s annual inflation rate fell to 2.6 percent in June, beating analysts’ expectations as lower petrol and diesel prices helped ease consumer costs, according to official figures released on Wednesday.
The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) rose by 2.6 percent in the 12 months to June, down from 2.8 percent in May. Economists had forecast a more modest decline to 2.7 percent.
The drop was largely driven by falling fuel prices after crude oil costs declined following a ceasefire between the United States and Iran.
However, analysts cautioned that the slowdown may be temporary, noting that renewed fighting in the Middle East has pushed oil prices higher after the collapse of a preliminary peace agreement.
The latest inflation figures provide an early boost for Prime Minister Andy Burnham, who took office on Monday and has pledged to tackle the cost-of-living crisis. As one of his first policy measures, Burnham announced an energy tax cut aimed at reducing household expenses.
“Falling inflation is news families want to hear, but there is much more to do to give people the breathing space they need,” Finance Minister John Healey said. He added that the new government had made easing living costs a priority during its first week in office.
Burnham succeeded Keir Starmer, who resigned last month as prime minister and Labour Party leader following months of political pressure over a series of scandals, economic challenges and policy reversals.
Despite the latest decline, Capital Economics Chief UK Economist Paul Dales warned that inflation is likely to rise again. He said the delayed impact of higher energy prices could push inflation above 3 percent by September and to around 3.5 percent early next year.
