UK homeowners get some respite as inflation falls by more than anticipated to a 15-month low

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Inflation in the U.K. has fallen by more than anticipated to a 15-month low in a development that may ease the pressure for the Bank of England to raise interest rates sharply over the coming months

LONDON — Inflation in the U.K. has fallen by more than anticipated to a 15-month low, official figures showed Wednesday, a development that may ease the pressure on the Bank of England to raise interest rates sharply over the coming months to the potential relief of struggling households.

The Office for National Statistics said that inflation, as measured by the consumer prices index, fell to 7.9% in the year to June from 8.7% the previous month. Most economists had expected a more modest decline to 8.2%.

The statistics agency said the falling of fuel prices was the biggest driver behind the drop, while food price inflation also pared back, though remained historically high.

Despite the decline, inflation is still running far higher than the Bank of England's target rate of 2%. As a result, the central bank is expected to raise its main interest rate further at its upcoming meeting in early August.

However, analysts said the bigger-than-expected fall may mean it only raises it by a quarter of a percentage to 5.25% rather than a half-point. Financial markets now think that the bank will no longer drive rates up to 6% or possibly beyond.

“The positive surprise to headline inflation in June takes significant pressure off the bank to go big again,” said Kallum Pickering, senior economist at Berenberg Bank.

That may provide homeowners who are looking to get a new mortgage deal some comfort if the sharp upward pressure on mortgage rates starts to decline.

The Bank of England, like other central banks around the world, has been