Andy Burnham (right) speaks with local bus users at a bus station during a visit to Bath after pledging measures to ease cost-of-living pressures. (AFP pic) LONDON: Britain’s annual inflation rate fell more than expected in June, driven by lower fuel prices, in a boost to new prime minister Andy Burnham as he touted his plans to ease the cost of living on Wednesday. “The public’s priority is reducing cost of living pressures and that’s what I’m doing,” he told reporters in the southwestern city of Bath.
“I’m taking a difficult look at some of the things that the government was committed to … and reprioritising,” Burnham added. The Consumer Prices Index rose by 2.6% in the 12 months to June, down from 2.8% in May, the Office for National Statistics said in a statement. Analysts’ consensus forecast had been for a slowdown to 2.7% last month.
Much of the fall was a result of petrol and diesel prices easing as crude prices tumbled in the wake of a ceasefire between the United States and Iran. However, analysts expect the inflation dip to be short-lived as fresh fighting in the Middle East this month led to the collapse of a preliminary peace deal, pushing oil prices back up. Burnham, who became prime minister on Monday, unveiled a tax cut on household electricity prices on Tuesday and a £2 (US$2.70) cap on single bus fares on Wednesday in his first days in the job.
“Falling inflation is news families want to hear but there is much more to do to give people the breathing space they need,” said newly-appointed finance minister John Healey. “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,” he added. ‘Higher inflation coming’ Burnham announced that value-added tax (VAT) would be taken off electricity bills from October in a policy costing the Labour government about £850 million in the current UK financial year.
The measure’s start date coincides with an expected rise in the UK energy regulator’s price cap on electricity and gas bills, a consequence of the ongoing US-Iran war that will likely spur inflation. “Higher inflation is still coming,” said Paul Dales, chief UK economist at Capital Economics. “The lagged effect from high energy prices will probably lift inflation above 3.0% in September and to about 3.5% early next year,” he said.
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