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Falling fuel prices push Britain's inflation rate below 8%

A sharp fall in fuel prices was largely responsible for the pace at which prices rose in Britain slowing to 7.9% in the 12 months to June, the Office for National Statistics said Wednesday. File Photo by Adam Vaughan/EPA-EFE
A sharp fall in fuel prices was largely responsible for the pace at which prices rose in Britain slowing to 7.9% in the 12 months to June, the Office for National Statistics said Wednesday. File Photo by Adam Vaughan/EPA-EFE

July 19 (UPI) -- Britain's inflation rate decelerated sharply in June to its lowest level in 15 months due to lower fuel prices and food rising at a slower pace, the main statistical agency said Wednesday.

Consumer Price Inflation rose by 7.9% in the year to June, down from 8.7% in May, as the price of gasoline and diesel fell by 22.7% and food inflation continued its downward track slowing from 18.4% in May to 17.4%, according to figures from the Office for National Statistics.

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Price increases slowed across the board with goods inflation declining from 9.7% to 8.5%, while the services rate eased from 7.4% to 7.2%. Clothing and footwear and communication inflation ticked up slightly, while recreation and culture and education inflation remained flat.

Importantly, the ONS noted, there was an absence of major offsetting upward contributions to inflation.

Core inflation -- which strips out volatile energy, food, alcohol and tobacco prices -- is now back below 7% again after spiking by a third of a percentage point in May to its highest level in 31 years.

"Inflation fell substantially to its lowest annual rate since March 2022, driven by price drops for motor fuels. Meanwhile, core inflation also fell back after hitting a 30-year high in May," ONS Chief Economist Grant Fitzner said in a Twitter post, adding that while food inflation was down, it remained "very high."

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"Although costs facing manufacturers remain elevated, especially for construction materials and food items, the pace of growth has fallen across the last year with the overall cost of raw materials falling for the first time since late 2020," said Fitzner.

Wednesday's inflation numbers were in line with central bank expectations but still fell far short of the government's goal of halving it as Prime Minister Rishi Sunak renewed his commitment to getting inflation down.

"There's a reason halving inflation is my top priority. Inflation drives up the cost of living, it eats into the pounds in your pocket. We still have a lot of work to do, but we'll get there if we stick to the plan," Sunak wrote on Twitter.

"We have to halve inflation. I'm working hard to get it done."

However, inflation in Britain remains the highest of the advanced economies and Sunak has only pledged to get it down to half the 11.1% it reached in October -- and not to the target of 2% that the Bank of England says is necessary to get the economy back on an even keel.

The Labor opposition's shadow chancellor Rachel Reeves took aim at the Conservative government's record on the economy.

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"13 years of Tory failure means Britain is hit harder by high inflation than our international peers," Reeves wrote on Twitter.

"Only Labor has a plan to ease the cost of living crisis for working people now -- but also to build a stronger, more secure economy for the future."

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