The fall in inflation could lead to lower loan and mortgage rates within weeks.
The Office for National Statistics said yesterday that consumer price inflation had fallen from 8.7% in May to 7.9% in the year to June. There was also a drop in the rate of core inflation from 7.1% to 6.9%.
This has raised hopes that the Bank of England will not have to increase rates much further than the current 5%.
Rishi Sunak, the prime minister, said the figures showed that the government had the right approach and insisted that he was going to “stick to the course”.
