UK inflation falls sharply to 6.8% driven by drop in gas and electricity prices

The UK’s annual inflation rate dropped to 6.8% in July, according to the latest figures from the Office for National Statistics (ONS). This follows a decline from 7.9% in June and a peak of 8.7% in May.”

A significant factor in this decline has been the drop in gas and electricity prices, which have provided the most substantial downward contributions to the monthly change in the Consumer Prices Index.

However, food prices did see a rise in July 2023, albeit at a slower pace than in July 2022, leading to a further easing in the annual inflation rates.

Matthew Corder, ONS Deputy Director of Prices, provided further insights, noting that the reduction in the energy price cap played a significant role in the decline.

He mentioned, “Inflation slowed markedly for the second consecutive month, driven by falls in the price of gas and electricity.”

He also pointed out that while the cost of goods fell, service prices saw an increase, keeping core inflation unchanged in July.

Reacting to the latest inflation figures, Labour’s shadow chancellor, Rachel Reeves, commented, “Inflation in Britain remains high and higher than many other major economies.”

She further criticised the Conservatives, stating, “After 13 years of economic chaos and incompetence under the Conservatives, working people are worse off.” Reeves also highlighted Labour’s plan to boost growth and improve living standards.

Chancellor of the Exchequer, Jeremy Hunt, welcomed the inflation rate announcement but emphasised that the government’s work is far from over.

He stated, “The decisive action we’ve taken to tackle inflation is working, and the rate now stands at its lowest level since February last year. However, we must stick to our plan to halve inflation this year and get it back to the 2% target as soon as possible.”

TUC General Secretary Paul Nowak said: “We all want to see lower inflation. But it will take more than price rises slowing for working people to feel better off – especially with food bills remaining sky high.”

“Real wages are still worth less today than in 2008 after the longest pay squeeze in 200 years.  And at the same time, unemployment and insecure work are shooting up.”

“Our economy is far from out of the woods – too many long-run challenges remain unaddressed.”

“We need a credible plan to deliver decent well-paid jobs across the country. The Conservatives have yet to produce one despite being in office for the past 13 years.”

ONS labour market figures published yesterday revealed a 109,000 rise in unemployment and a record number of workers (1.2 million) on zero-hours contracts.