ITV News' Business and Economics Editor Joel Hills reports on the latest inflation figures
Suddenly it all looks a little less grim.
The headline annual rate of inflation fell steeply to 7.9% in June, dragged lower by a fall in petrol prices and by food prices, which are not rising as fast as they did a year ago.
'Core' inflation, which strips out energy and food prices, eased back a little. Services inflation fell.
Inflation in the UK remains higher than in the other G7 countries, but at least we are now on the same downwards path.
Joel Hills reports live from Gaydon, Warwickshire
Inflation was always going to fall in June, in this event the fall was a big one. The “joint second biggest monthly fall this century”, calculates the Resolution Foundation - it was certainly larger than the consensus expected.
The question, of course, is will it be enough to reassure the Bank of England that it has done enough to begin the process of bringing price rises back to reasonable levels or will it judge that further interest rate rises are necessary?
“Our plans our working,” declares Andrew Griffith, Economic Secretary to the Treasury, victoriously.
The Bank is likely to be more cautious.
Pay in the private sector is running hot, “core” inflation (6.9%) suggest prices are rising across the economy at a rate the Bank will find intolerable and the headline rate of inflation (7.9%) is almost four times higher than the Bank’s target rate.
There are reasons to be hopeful that the worst may soon be over and that “real” wages (adjusted for inflation) will soon be rising again after 18 months of falls.
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But the lived experience of so many households and businesses in the UK remains pretty miserable.
This morning, the markets are betting that interest rates will rise by 0.25% next month. Only yesterday, a rise of 0.5% was considered more likely.
The narrative has shifted and in ways that will reassure anyone who is holding a mortgage but we should remember that while inflation is falling, prices are not. In the case of food, they are simply rising a slightly less painful rate.
“We are still in the belly of this crisis,” says Alfie Stirling, Chief Economist at JRK, which estimates that 5.7 million low-income families are already forced to skip meals.
It’s hard to disagree.