Off the back of lower energy prices and in line with experts’ predictions, official statistics on Wednesday showed that Britain’s annual inflation rate plunged in July to a 15-month low.
According to the Office for National Statistics (ONS), the Consumer Prices Index (CPI) increased at an annual pace of 6.8 percent, down from 7.9 percent in June, which helped to alleviate the nation’s cost-of-living crisis.
The increase in prices in July was in line with analyst expectations, including those of the Bank of England, which had predicted a 6.8% pace.
It comes after a lower-than-anticipated decline in June, when the CPI dropped by 0.8%.
However, despite the Bank of England raising its benchmark interest rate more than a dozen times in a row to try to curb inflation, UK inflation has been the highest among the G7 nations for months.
Gas and power prices decreased in July, but food prices increased, albeit more slowly than they did in the same month a year earlier.
According to Matthew Corder, deputy director of pricing at the ONS, “inflation slowed significantly for the second consecutive month, driven by falls in the price of gas and electricity.”
“Food price inflation has once again decreased, albeit still being high, especially for milk, bread, and cereal.
He continued, “Core inflation was steady in July, with lower prices for goods being countered by increased prices for services.
Get it finished.
The goal established by Prime Minister Rishi Sunak is to cut inflation in half this year, to about 5% by 2024.
Sunak argued that Wednesday’s results proved “the plan is working,” even though the Bank of England predicted that, as a result of public sector pay increases, inflation may potentially increase again next month.
Sunak continued, “If we follow the strategy I’ve laid forth, we’ll succeed.
The economic research tank Institute for Fiscal Studies, though, was dubious.
The aim is in peril, according to IFS research economist Heidi Karjalainen, because of the persistently high rate of price inflation for commodities and services other than food and energy.
Jeremy Hunt, the finance minister, praised the most recent CPI figures but stressed that “we’re not at the finish line” and that the key objective remained achieving the Bank of England’s two-percent inflation target “as soon as possible.”
Data released on Tuesday revealed that while earnings surged at a record annual rate, unemployment in the UK rose in the three months leading up to the end of June.
Since late 2021, interest rate increases have caused significant financial anguish, particularly in the mortgage sector as commercial lenders raise their own rates on house loans.
The Bank of England’s monetary policy committee will next convene in late September to discuss whether to raise its current base rate of 5.25 percent. The release of Wednesday’s CPI numbers might not prevent that meeting.