Inflation has fallen to 7.3% in June in the latest Consumer Price Index including owner occupiers’ housing costs (CPIH) figures, compared to 7.9% in May, the Office for National Statistics (ONS) has found.

The CPIH figures have shown that the current rate is the lowest it has been since March 2022, having hit a 40-year rate high in October 2022.

The latest Consumer Price Index (CPI) figures by the ONS have also seen a fall to 7.9% in the 12 months to June 2023, down from 8.7% in May 2023.

This figure is also the lowest the CPI data has been since March 2022, having hit a recent peak in October 2022 of 11.1%, the highest it has been since 1981.

Head of financial analysis at AJ Bell, Danni Hewson, said: “Finally, some good news on the inflation front as the headline number dropped below 8% for the first time since March 2022.

“Falling prices at the pump which have caused such controversy of late, were one of the biggest contributors to the larger than expected fall in inflation, and whilst food prices are still going up they’re not going up quite as fast as they were.

“But relief that the numbers finally seem to be going in the right direction will be short-lived for policy makers and politicians who understand that the average household won’t care about cooling inflation, they just want prices to go down, and with one or two exceptions we’re still a fair way away from that.

Despite the fall in inflation prices, food inflation remains at a high CPIH 12-month level of 14.9% to July, the ONS revealed yesterday, although this did represent a fall from 16.5% in the previous month.

Although it is falling, analysts have stated that the rise in interest rates, which is expected to continue to increase, will add to the current cost-of-living crisis, meaning that many households will have to wait longer to see a difference in their respective financial situations.

Chief investment officer at digital wealth manager Nutmeg, James McManus, said: “Good news for the economy that inflation has cooled but question marks remain over how ‘sticky’ high prices will be and the impact of record high inflation lingering in the UK.

“The slowing of inflation raises hopes that the economy will avoid recession this year, a prospect that’s backed up by data around the labour market. The economy is going through a rough patch, but thankfully the data doesn’t suggest that all-out catastrophe is on the horizon.

“For households, lower energy prices and the easing of food price inflation should become more apparent in the coming months and provide some relief from this cost of living crisis. However, the impact of higher interest rates is yet to really bite, so there’s reason to remain cautious still.”

Furthermore, some analysts have pointed towards investment as a way to bring the inflation levels down further, despite stating that the market can go up, as well as go down, meaning that it is better to try and both save and invest where necessary.

Managing director for retail direct at Standard Life, Dean Butler, said: “Inflation just isn’t going away as quickly as many would have hoped. We’re now in the second half of 2023 and we’re still seeing the CPI come in just below 8% (7.9%), and still hitting households across the country where it hurts as prices continue to rise just at a slightly slower rate. On top of the obvious impact on monthly finances, people lucky enough to have cash-based savings are now starting to feel the impact of savings rates failing to keep up with inflation, for a sustained period of time.

“While returns are never guaranteed, one way to counter the impact of inflation is to consider investing. In the UK, we can sometimes be a nation of savers, but not investors, meaning the chance to benefit from the potential power of investment growth can be missed. Pensions and stocks and shares ISA’s can be great places to start. It’s important to bear in mind, however, that any sum invested can go down as well as up and they sometimes aren’t as easy to access as cash-based savings, so it’s good idea to keep a ‘rainy day’ fund in cash for emergencies too, if you can.”

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