UK inflation levels fell unexpectedly to 2.6 percent in June according to official figures, marking the first drop since October.
According to the latest figures from the Office of National Statistics (ONS) inflation came in at 2.6 percent for June, down from 2.9 percent in May.
The figure marks the largest monthly recorded fall since February 2015, and was attributed largely to falling petrol and diesel prices.
Nevertheless, levels still remain comparatively high, with wage growth levels failing to offset inflation.
Deputy national statistician Jonathan Athow at the ONS said of June’s figures:
“Today’s fall in inflation is mainly due to drops in petrol and diesel prices. However, the rate remains higher than in the recent past.”
Despite recent speculation that the Bank of England may choose to vote to tighten monetary policy at their next meeting, the latest inflationary figures may make an interest rate hike less likely.
Last month, three Bank of England officials called for UK interest rates to rise amid concerns over rising inflationary levels.
“Weak GDP and wage growth will keep higher interest rates at bay,” commented Samuel Tombs at Pantheon Macroeconomics. “Households’ real incomes are set to flatline this year.”
This follows last weeks release of the UK employment figures for the three months to May, which proved somewhat encouraging.
According to the official figures, the unemployment rate fell by 0.2 percent to its lowest since 1975, at 4.5 percent.
However, taking into consideration inflation, real weekly wages fell by 0.5 percent compared with a year previously.
The marked devaluation of the pound sterling following the UK’s decision to leave the EU last June, has steadily driven up consumer prices in recent months.
Since the referendum, the pound has fell by around 13 percent against the dollar. As of currently, the pound is trading at just over $1.30 against the dollar.
The Bank of England is set take a decision on interest rates in August.