Inflation has fallen to 7.9% in June, down from 8.7% in May, the latest Office for National Statistics (ONS) figures have revealed.
Interactive Investor senior personal finance analyst Myron Jobson described the dip as “larger than expected”.
He said the news will reduce the pressure on the Bank of England (BoE), which will now have to go “less far when it comes to upping interest rates to tame inflation”.
The BoE predicted that inflation would fall to 7.9% in June.
Food prices are still rising but not as fast as they previously were.
Jobson said that the drop could also “end the chaos which has gripped the mortgage market in recent months on the uncertainty over how high interest rates will go to combat stubbornly high inflation.
“The hope now for those looking to get on and move up the property ladder as well as existing homeowners is that mortgage rates will fall sooner rather than later.”
AJ Bell head of financial analysis Danni Hewson said: “Finally, some good news on the inflation front as the headline number dropped below 8% for the first time since March 2022.”
He suggested falling petrol prices “were one of the biggest contributors to the larger than expected fall in inflation”.
However, he added: “The drop will be short-lived for policy makers and politicians who understand that the average household won’t care about cooling inflation, they just want prices to go down, and with one or two exceptions we’re still a fair way away from that.”
The UK still has one of the highest inflation rates of “any advanced economy” but as Resolution Foundation think-tank head of research James Smith said the UK “merely looks bad, rather than a basket case” following the ONS CPI figure.
