The Consumer Prices Index (CPI) measure of inflation unexpectedly fell to 2.6% in June, down from 2.9% in May 2017.
The rate of inflation fell for the first since April 2016, although it remains higher than the rates seen over the last 4 years.
Last month’s fall was largely down to a further drop in fuel prices, which fell for the fourth month in a row according to the Office for National Statistics.
Suren Thiru, head of economics at the British Chambers of Commerce, said:
“With UK economic conditions softening, it is crucial the Monetary Policy Committee holds its nerve on interest rates, particularly during this period of heightened political uncertainty.
“Raising rates too early could undermine consumer and business confidence, stifling UK growth further.”
Mike Cherry, national chairman at the Federation of Small Businesses, added:
“Confirmation that rates bills will rise in line with CPI rather than RPI from 2020 will go some way to supporting small firms that are struggling against sharp hikes in the future.
“Given that operating costs are now at their highest in 4 years, and against a backdrop of unprecedented political and economic uncertainty, help is needed now.”
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