The move, which is the first time since 2003 that CPI has fallen between May and June, was accompanied by a fall in the retail prices index from 5.2% to 5% over the same period.
The recreation and culture, and clothing and footwear sectors put the most downwards pressure on figures, the ONS said, with a 0.9% monthly increase in food and non-alcoholic beverage prices representing “by far the most significant upward contribution” to CPI.
Core inflation – all CPI items excluding energy, food, alcohol and tobacco – fell from 3.3% to 2.8%, its lowest level since November last year.
Jonathan Loynes, chief European economist at Capital Economics, said the fall “might be the first real sign the weakness of households’ spending power is starting to bear down on underlying price pressures in the high street”.
“That does not mean that inflation has now peaked – a rise to 5% or above is still very likely in response to the lagged effects of previous energy and commodity price rises,” he said.
“But the peak may now be a bit lower than previously feared and the figures may give the MPC [Monetary Policy Committee] a bit more confidence inflation will fall back sharply next year when food/energy effects finally wane.”
