Rachel Reeves was the Chancellor in June (Image: Getty)
The rate of Consumer Prices Index inflation fell to 2.6% in June from 2.8% in May, the Office for National Statistics said. This marks the UK’s lowest rate of inflation in 15 months, as food and fuel prices dropped.
It was down from 2.8% in May, the ONS said – the lowest since March 2025 and below the 2.7% rate that most economists had predicted. ONS chief economist Grant Fitzner said: “A fall in motor fuel prices, particularly diesel, helped ease inflation in June.
This comes as a boost to the new PM. (Image: Getty)
“Food 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.
“The 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.”
The lower-than-expected CPI rate is set to provide some relief to new Prime Minister Andy Burnham, who has made efforts to ease the cost of living a top priority.
His Cabinet reshuffle saw John Healey appointed Chancellor, who called the falling finaltion welcome news, but acknowledged more needed to be done.
He said: “Falling inflation is news families want to hear but there is much more to do to give people the breathing space they need. That is why yesterday we cut VAT on electricity bills and today we’re announcing a £2 cap on bus fares from January.
It has been the privilege of my life to serve as the Chancellor of the Exchequer.
The economy today is stronger, fairer and more resilient because of the choices we have taken as a Labour Government over the past two years.
Stability restored, investment delivered and reform…
— Rachel Reeves (@RachelReevesMP) July 20, 2026
“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. Both these changes are a win-win. They help keep inflation down while helping people afford the essentials.”
Mr Healey replaced Rachel Reeves, with whom he clashed over cash for the defence investment plan, as she left government after turning down another role.
Ms Reeves was offered a “big job” within the Cabinet, the BBC reports, but declined.
In a post on X, she expressed support for her successor and the new Prime Minister, adding that she will still “play my part” in helping the Government.
She wrote: “It has been the privilege of my life to serve as the Chancellor of the Exchequer. The economy today is stronger, fairer and more resilient because of the choices we have taken as a Labour Government over the past two years.
“Stability restored, investment delivered and reform to our economy under way. I said when I was appointed Chancellor that I would judge my time in office if the lives ordinary working class people have been improved. I’m proud to say that they have.
“And to every young woman and girl let my time in office show there should be no ceilings on your ambitions, your hopes or your dreams. I wish the very best of luck to my successor, Andy and his cabinet.
“You have my full support, and I will continue to play my part in helping this Labour government deliver the change the country needs.”