Last month\u2019s consumer prices index reading outdid economists\u2019 forecasts of a slide from 2.8% in May<\/a> to 2.7%, amid a fall in the prices of fuel, particularly diesel, helped by the unstable truce in the Middle East conflict.<\/p>\n The Office for National Statistics<\/a> said clothing also dropped in price month on month along with the cost of transport and food, offsetting modest price increases in most other goods and services.<\/p>\n Grant Fitzner, the ONS chief economist, said: \u201cFood prices fell this month, driven by products including chocolate, margarine and beef. Clothing prices also fell with the start of summer sales, with bigger discounts than last year.<\/p>\n \u201cThe cost of raw materials dipped for the first time since January, mainly due to the lower price of crude oil, while the increase in the costs of goods leaving factories slowed again.\u201d<\/p>\n The new chancellor, John Healey<\/a>, said the drop in prices growth was \u201cnews families want to hear\u201d but warned \u201cthere is much more to do to give people the breathing space they need\u201d.<\/p>\n He added: \u201cThat is why yesterday we cut VAT on electricity bills and today we\u2019re announcing a \u00a32 cap on bus fares from January. We have chosen to focus on the cost of living in our first week, signalling that concern for working people will be at the heart of everything we do.<\/p>\n The shadow chancellor, Sir Mel Stride, blamed the government for the fact inflation remained above the Bank of England\u2019s 2% target.<\/p>\n \u201cLabour\u2019s tax hikes and reckless borrowing stoked inflation, and Andy Burnham has already made billions of pounds of spending commitments without any plan to pay for them,\u201d he said.<\/p>\n Joe Nellis, the economic adviser at the accountancy firm MHA, said the fall in inflation to 2.6% marked \u201ca welcome piece of good news for the incoming prime minister and his chancellor as they look to set out their policy agenda\u201d.<\/p>\n Nellis, an emeritus professor at Cranfield University, added: \u201cThe escalation of tensions in the Middle East in February led to fears of inflation spiralling out of control, as supply chains were disrupted and oil prices surged.<\/p>\n \u201cHowever, while inflation has remained consistently above the Bank of England\u2019s 2% target, it remains far below expected levels \u2013 in its world economic outlook published in April, the IMF predicted inflation to head towards 4% by the end of the year.\u201d<\/p>\n skip past newsletter promotion<\/a>Free newsletter | Every weekday<\/p>\n Sign up to Business Today<\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n after newsletter promotion<\/p>\n Concerns that the Bank could increase interest rates later this month are likely to ease. Several members of the central bank\u2019s monetary policy committee have said they are worried about inflation running persistently above target unless they push up interest rates from their current 3.75%<\/a>.<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/06\/500.jpg\")
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