Inflation in Britain has dropped to 7.9 per cent in the year to June, according to the Office for National Statistics (ONS).
Despite inflation dropping more than expected, it still remains high - but is a sign of some respite for mortgage holders.
The consumer price index (CPI) measure of inflation shows prices are still rising, just at a slower pace than before, as the rate fell from 8.7 per cent in the year to May.
Most economists had expected the rate of inflation to fall to 8.2 per cent in June.
Despite inflation dropping more than expected, it still remains high - but is a sign of some respite for mortgage holders
The ONS said falling fuel prices was the biggest driver behind the drop, while food price inflation also pared back to 17.3 per cent from 18.7 per cent in May, though still painfully high.
June’s figures could see the Bank of England opt for a smaller increase in interest rates at its next meeting in August after June’s half a percentage point shock hike to 5 per cent, according to experts.
Tory MP Anthony Browne said the announcement "starts to reduce pressure on mortgage rates" but more still needs to be done.
He tweeted: "Great news that headline inflation has fallen faster than expected to 7.9 per cent, now over 3 per cent down from the peak last year.
"That starts to reduce pressure on mortgage rates. But we can’t let up: inflation needs to keep coming down."
The steep fall in inflation means that while prices are still rising, they are not increasing at such a rapid pace.
Chancellor Jeremy Hunt said: “We aren’t complacent and know that high prices are still a huge worry for families and businesses.
“The best and only way we can ease this pressure and get our economy growing again is by sticking to the plan to halve inflation this year.”
Homeowners have seen their mortgage rates surge in recent weeksPA
Interest rates have been increased 13 times consecutively in a bid to dampen economic activity.
A higher rate set by the Bank means more expensive borrowing and higher mortgage bills.
ONS chief economist Grant Fitzner said: “Inflation slowed substantially to its lowest annual rate since March 2022, driven by price drops for motor fuels. Meanwhile, core inflation also fell back after hitting a 30-year high in May.
“Food price inflation eased slightly this month, although it remains at very high levels.
“Although costs facing manufacturers remain elevated, especially for construction materials and food items, the pace of growth has fallen across the last year, with the overall cost of raw materials falling for the first time since late 2020.”