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UK inflation falls

UK inflation falls

A sigh of relief but not the end

Downing Street and the Bank of England will be breathing a sigh of relief this morning. UK inflation has fallen to a 15-month low of 7.9 per cent in June, down from 8.7 per cent in May. Core inflation came in at 6.9 per cent (from 7.1). The fall was higher than forecast, giving the BofE breathing space. It may be able to raise interest rates by only 0.25 per cent next month. A reminder: inflation peaked at 11.1 per cent last year. While rates have been slowly falling inflation has remained stubbornly high compared to the 2 per cent goal and the rest of the G7 – US inflation in the year to June dropped to its slowest pace in over two years (3 per cent). It just might be the beginning of the end of a nasty economic period. Brits should hold their breath. 

Photograph Peter Macdiarmid/Getty Images