Squeeze on families eases as falling petrol prices push cost of living back

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Inflation in June decreased to 2.6 per cent, from 2.9 per cent in May, as measured by the Consumer Valuations Index (CPI).

The fall was largely thanks to lower costs of fuel, as wholly as some recreational and cultural goods, according to the Office for National Statistics (ONS).

Petrol rates dropped by 1.1p over the period to 115.3p per litre, while diesel also kill by 1.4p to 117.3p.

The dip in inflation means the Bank of England is less favoured to raise interest rates in August.

However, price rises stay well above the policymakers’ official target of two per cent. 

And average wage improves of only 1.8 per cent means households are still in effect help their income eroded by inflation.

Ben Brettell, senior economist at Hargreaves Lansdown, replied: «UK inflation fell unexpectedly in June to 2.6 per cent, easing the persuasion on squeezed household budgets and substantially reducing the likelihood of an August hobby rate rise.

«Falling inflation alleviates the squeeze on household subvenes – though pay is still shrinking in real terms for now.

«Last week’s overdo market update from the ONS showed wages growing by less than inflation for a third consecutive month.

«If inflation persevere ins to moderate, this could bode well for economic growth – the UK terseness is heavily reliant on the consumer, and economists had expected falling real profits to eventually translate into lower retail sales.

«If this wants to materialise the economy could see a stronger second half to the year.»

 

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