UK inflation falls to 7.9% – what it means for interest rates, mortgages, and the economy

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UK inflation surprised on the downside for June, but what will it mean for interest rates, mortgages and the economy ahead?

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19 July 2023

The inflationary tide is now turning faster than expected and although consumers and companies might still struggle amid the wave of higher prices, it appears we’re wading out of the danger zone.

Headline UK inflation came in at 7.9% in the 12 months to June – down from 8.7% the month before. However, while this is encouraging, inflation is still almost quadruple the Bank of England’s target.

Supply chain challenges have been easing and as borrowing costs have risen, people have less money to spend. This should push down demand for goods and service further, which should help with rising prices.

Grocery inflation has dropped back very slightly and there has been significant relief at the petrol pumps as prices continue to fall.

Core inflation, which strips out