The Consumer Price Index (CPI) price has dipped to six.8 % within the 12 months to July 2023 as a consequence of a drop in energy prices and a slowdown in meals worth will increase, ONS information reveals.

The common worth for every unit of electrical energy was diminished to 30p per unit whereas gasoline costs fell to 8p per unit from the beginning of July. This noticed the typical annual power invoice for a family drop to £2,074 from the capped price of £2,500.

Gas costs additionally declined by greater than 25 % in July towards the earlier month because of the cap change, whereas electrical energy costs noticed an 8.6 % lower.

Soaring food price inflation additionally slowed down final month, which contributed to the discount within the general inflation price. Food costs elevated by 14.9 % in July towards the identical month final 12 months, easing again from 17.3 % development for June.

While this displays the UK’s lowest price seen since February 2022, the tempo of inflation nonetheless stays excessive that means costs are nonetheless growing - simply at a slower price than the month prior.

What does the inflation price imply for cash?

High inflation charges imply increased product costs and a fall within the buying energy of cash. When basic costs rise throughout inflation however the worth of cash stays the identical, it means households can purchase fewer items for a similar financial sum.

As CPI charges report a 6.8 % inflation price within the UK, this means items now price 6.8 % greater than they did final 12 months.

While the costs of sure commodities have fallen, vital will increase are nonetheless noticeable throughout many merchandise and components, together with fertiliser, which is being handed down by farmers to retailers.

According to the ONS, the worth will increase of merchandise reminiscent of sugar, yoghurt and fish additionally accelerated final month.

Most Britons benefited from decrease power payments in July following a cheaper price cap of £2,074, down from the Government’s Energy Price Guarantee of £2,500. However, this nonetheless stays increased than the identical month final 12 months when power had been capped at a median of £1,971 per family.

Giles Coghlan, chief market analyst consulting for HYCM, mentioned: “In theory, rising GDP and falling inflation figures should be good news for the UK economy – in reality, however, other indicators show that the UK’s inflation fever shows no signs of breaking soon.

“Although the headline rate of inflation has declined to 6.8 percent, the latest data suggests that strong wage growth is likely to keep inflation elevated - not to mention more persistent - in the coming months.

“The Chancellor has already forewarned that wage growth and an uptick in clothing prices could see inflation rebounding again in August, tempering any optimism that today’s release may produce.”

The Government has set a brand new inflation goal to scale back it to round 5.3 % by the top of 2023. Chancellor Jeremy Hunt mentioned on Wednesday that the easing of inflation exhibits "the decisive action we've taken to tackle inflation is working" however "we're not at the finish line".

However, consultants have warned that, whereas core CPI inflation, which displays the change in costs of products and companies (however discludes these from the meals and power sectors), stays unchanged at 6.9 %, this pledge is in "jeopardy", because it might point out persistent inflation.

Heidi Karjalainen, a analysis economist on the Institute for Fiscal Studies (IFS) mentioned: “The stubbornly excessive price of worth inflation for items and companies apart from meals and power has put the goal in jeopardy."

"With solely 4 months to go, it now not appears in any respect clear that inflation on the finish of the 12 months can have fallen by sufficient to realize it."