UK inflation fell to its lowest rate in 15 months in June, dropping to 2.6% from 2.8% in May, according to the Office for National Statistics. The decline, driven by lower food and fuel prices, provides an early boost to Prime Minister Andy Burnham's cost-of-living-focused government.
Tories Criticise Labour's Economic Record
Shadow Chancellor Sir Mel Stride said: “Inflation remaining above target at 2.6% is deeply concerning for families. Labour's tax hikes and reckless borrowing stoked inflation, and Andy Burnham has already made billions of pounds of spending commitments without any plan to pay for them.”
The Bank of England's target for inflation is 2%.
Government Responds with Cost-of-Living Measures
Newly appointed Chancellor John Healey said: “Falling inflation is news families want to hear, but there is much more to do to give people the breathing space they need. That is why yesterday we cut VAT on electricity bills, and today we’re announcing a £2 cap on bus fares from January. We have chosen to focus on the cost of living in our first week, signalling that concern for working people will be at the heart of everything we do. Both these changes are a win-win. They help keep inflation down while helping people afford the essentials.”
The dip in inflation is expected to be temporary due to lower petrol and diesel prices. However, the price cap on gas and electricity rose in July, lifting the typical household energy bill by 13%. Meanwhile, the resumption of military strikes in the Middle East sent oil prices back over $90 a barrel, which could inflame inflation if sustained.
