![\"Petrol](\"https:\/\/dailybusinessgroup.co.uk\/wp-content\/uploads\/2026\/04\/Petrol-prices-March-2026.png\")
Inflation slowed to 2.6% in the 12 months to June, providing new Prime Minister Andy Burnham with an early boost to his plans for taming the cost of living.<\/p>\n
The latest data from the Office for National Statistics compares with the 2.8% rate for the year to May.<\/p>\n
Chancellor\u00a0John\u00a0Healey said:\u202f\u202f\u00a0\u201cFalling inflation is news families want to hear but there is much more to do to give\u00a0people\u00a0the breathing space\u00a0they\u00a0need.\u00a0<\/p>\n
\u201cThat is why\u00a0yesterday\u00a0we\u00a0cut\u00a0VAT\u00a0on\u00a0electricity bills and today\u00a0we\u2019re\u00a0announcing\u00a0a \u00a32 cap on\u00a0bus fares [in England] from January. <\/p>\n
\u201cWe 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.<\/p>\n
\u201cBoth these changes are a win-win. They help keep inflation down, while helping people afford the essentials.\u201d<\/p>\n
The fall will ease pressure on the Bank of England to raise interest rates, though inflation is expected to rise again.<\/p>\n
June saw a period of calm in the US-Iran war and reopened the Strait of Hormuz which is a vital route for oil supplies. This led to cheaper prices at the pumps.<\/p>\n
The resumption of military strikes in the Middle East has sent oil prices back over $90 a barrel. If it stays elevated, that risks sending inflation upwards.<\/p>\n
Martin Sartorius, lead economist at the CBI, said: \u201cInflation ticked down slightly in June, broadly in line with our latest projection. <\/p>\n
\u201cWe expect this easing will prove temporary. Inflationary pressures are likely to firm over the next few months, reflecting the ongoing impact of the Iran conflict on energy bills and some pass through to domestic prices. <\/p>\n
\u201cRenewed tensions in the Middle East mean that households and businesses will continue to face an uncertain and volatile outlook as we head towards autumn.<\/p>\n
\u201cWe\u00a0anticipate\u00a0the Bank of England\u2019s Monetary Policy Committee to keep interest rates unchanged\u00a0when it meets next week,\u00a0as it\u00a0maintains\u00a0a\u00a0\u2018wait and see\u2019 approach\u00a0to the economy. <\/p>\n
\u201cAlthough risks\u00a0remain\u00a0elevated, a loosening\u00a0labour\u00a0market, soft domestic activity, and tighter financial conditions mean that the committee is unlikely to raise rates in the near term.\u201d\u00a0<\/p>\n
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