According to the ONS, CPI inflation in the UK economy in the year to June 2023 fell to 7.9% from 8.7% in May, its lowest level in 15 months. Financial markets had expected it to slow to 8.2%. Critically, Core CPI (excluding energy, food, alcohol and tobacco) fell from 7.1% in the year to May (which was its highest rate since 1992) to 6.9%.

The Bank of England focuses on Core CPI inflation to view medium-term trends in inflation. As a result, the fall in Core inflation in June, albeit only a small fall, means that financial markets substantially revised their expectations of peak interest rates down.

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