The UK’s rate of inflation dropped to 7.9% in the year to June, according to the Office for National Statistics (ONS).
Inflation is now at its lowest for more than a year, after several months of being stuck around the same level.
The Office for National Statistics said falling fuel costs, the first drop in raw materials prices since 2020 and a reduced rate of food bill rises has helped bring the inflation rate down. It means the rate of price rises in the UK has slowed more than expected, down from 8.7 per cent in May – although it remains high.
After 18 months of price shocks, the impact of sustained inflation remains the top issue for businesses that have answered our latest Quarterly Economic Survey (QES). 61% of businesses stated inflation as a factor of concern for businesses. Despite inflation easing on a slow downward trend after a peak of 11.1% last year, the rate is significantly higher than the 2% target set by the Bank of England. However, the Bank of England has predicted inflation will drop to 5% by the end of 2023, rather than the 4% it had been anticipating. Attention now turns to interest rates and the looming prospect of further increases which will ultimately impact businesses plans for growth and investment in the months ahead. 30% of respondents to our latest QES stated interest rates as a concern to their business, with further increases very likely, this figure is expected to ascend further.