UK inflation slowed more than expected in June, with the Consumer Prices Index falling to 2.6%, down from 2.8% in May and below the 2.7% economists had forecast. The Office for National Statistics attributed the drop largely to cheaper motor fuel, particularly diesel, alongside falling food and clothing prices, offering some relief to households and to the new government at a time when the chancellor faces pressure to do more on the cost of living.

Food and non-alcoholic drink price inflation eased to 1.7% in June from 2.2% in May, with the biggest falls in sugar, chocolate, confectionery, oils and fats such as margarine, plus lower beef prices. Clothing costs also fell as summer sales began with bigger discounts than last year, while raw material costs dipped for the first time since January on lower crude oil prices. However, economists cautioned the slowdown could prove a "false dawn", warning that renewed tensions in the Middle East and rising oil prices could push inflation back up later in the year.