Inflation in the UK dropped to 6.8% in the year to July from 7.9% in June, the second month in a row the rate has fallen, according to the latest data from the Office for National Statistics.
Inflation is now at a 15-month low, largely driven by a reduction in the energy price cap and food costs rising less rapidly, particularly milk, bread and cereals
But UK inflation remains stubbornly high overall compared to many other nations and well above the Bank of England’s target rate of 2%.
Alex Veitch, Director of Policy at the British Chambers of Commerce, said: “Today’s news that consumer price inflation continued to ease in July is encouraging. However, this comes off the back of months of high prices which have hit business hard. Many firms have yet to see the cost of raw materials fall.
“Businesses tell us that confidence is improving slightly as inflationary pressures ease. However, our latest quarterly economic survey showed most companies reported no improvement to sales, cash flow, or investment.
“High interest rates are now of real concern to firms. Investment across all sectors is suffering because of the cost-of-borrowing. Businesses need to be confident that interest rates have reached their peak.”
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