Surprise drop in UK inflation is good news for consumers | Larry Elliott
by Larry Elliott from on (#2WRJY)
Fall means the squeeze on real incomes will be less severe - and removes the threat of an interest rate rise
Rising inflation has been one of the big economic stories of the past year. The depreciation of sterling after the EU referendum has made the things Britain imports, such as clothes and food, dearer and the cost of living has risen steadily as a result.
The drop in the annual inflation rate to 2.6% in June was a welcome surprise. Two years ago, inflation was zero; in the month of the Brexit vote it was 0.5%. By May it had risen to 2.9%, with many City analysts confident that it would breach the 3% barrier within the next couple of months.
Related: Lower fuel prices slow pace of UK inflation
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