Consumer price index (CPI) inflation dropped to 2.6% in June, landing below expectations, the Office for National Statistics (ONS) has revealed.

The latest figure follows inflation holding at 2.8% in April and May.

Month-on-month, CPI inflation increased by 0.1% in June, compared to 0.3% in the previous year.

The ONS found that the largest downward contribution to June's inflation figure came from transport, particularly motor fuels. There were no large, offsetting upward contributions.

The latest data follows the appointment of Andy Burnham as Prime Minister on Monday.

While the data will appear to put him in good stead in gaining control of the economy, chief economist at the Institute for Chartered Accountants, Suren Thiru, is sceptical.

He stated: "June’s slowdown is a false dawn as it may have already been reversed this month with higher energy bills, following Ofgem’s energy price cap rise, likely to have lifted inflation above 3%.

"Though stubborn services and core inflation suggest that the UK remains exposed to the inflationary fallout from the Iran war, weaker wage growth and a sluggish economy will help blunt any second-round effects."

Despite this, head of personal finance at AJ Bell, Sarah Coles, has noted that this could positively impact savers.

She stated: "There could be a silver lining for savers, because the market is convinced that the Bank of England may need to raise interest rates to fight inflation, which tends to support savings rates. The markets are still only expecting a single rate hike by the end of 2026, but it’s expected to hit in September, with another potentially following in February.

"When rate expectations rise, swap rates rise, so fixed savings rates tend to do so too. However, the savings market moves slowly, and the shift in expectations has been relatively recent, so we’re yet to see much movement."

However, she added that this could affect those either buying a new home or remortgaging.

Coles concluded: "Mortgage rates had been falling across the board, but this week has seen them jump significantly, as the markets began to expect earlier rate rises, and swap markets started to price them in.

"This demonstrates how difficult it can be to second-guess where the mortgage market is heading at a time of such uncertainty. It’s also why it’s not worth hanging on for rates to hit a magic number, even if the market has been moving in one direction for a while. Instead, if you have a remortgage due in the next six months, check if you can agree a deal for your remortgage now. If rates fall from here, you can shop around elsewhere, but if they rise again, you’ll have locked in a competitive rate."

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