Inflation fell unexpectedly in June for the first time in nine months as lower fuel prices provided some respite for cash-strapped consumers.
The consumer prices index fell to 2.6% from a four-year high of 2.9% in May according to the Office for National Statistics. Economists had expected the rate to be unchanged.
The fall was driven by lower petrol and diesel prices, as well as toys and games. Fuel prices fell by 1.1% between May and June, compared with a 2.2% rise over the same month a year earlier.
However, at 2.6% inflation is still well above the Bank of England’s 2% target, and higher than annual earnings growth which is also 2%.
Frances O’Grady, general secretary of the TUC, said the government must act to halt the decline in living standards.
“The government must stop this cost of living squeeze. Many working people are caught in a vice as rising prices crush their pay.
“Ministers claim they are listening to struggling families. But now is the time to prove it. Britain needs a pay rise across the public and private sector.”
More details to follow …