UK inflation fell to 7.9% in the year to June 2023 amid a sharp fall in petrol prices, potentially easing forecasts for how aggressively the Bank of England will raise interest rates over the coming year.

The Office for National Statistics said the annual inflation rate as measured by the consumer prices index resumed a downward trend after unexpectedly sticking at 8.7% in May.

Financial markets now expect the Bank of England to increase interest rates less aggressively over the year and not above 6% early next year.

The fall in inflation was driven primarily by falls in petrol prices, which in turn were driven by a drop in crude oil.

Falling food prices also contributed, although food inflation remained high at a 17.3% annual rise, down from 18.3%.

Chancellor Jeremy Hunt said that today's figures were "welcome news" but "for families up and down the country, prices are rising much too fast".

James Smith, research director at the Resolution Foundation, said:

"The UK still has one of the highest inflation rates of any advanced economy, but after today it merely looks bad rather than a basket case. That is a very welcome improvement."

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