SUPERMARKETS must drop prices now that inflation has fallen, Jeremy Hunt insisted today.
The Chancellor said grocery chiefs must pass on falling production costs to hard-pressed consumers.
PAJeremy Hunt warned supermarket chiefs today that falling production costs must be reflected in grocery prices[/caption]
It comes as new inflation figures this morning saw the headline rate fall from 8.7% in May to 7.9% in June.
City economists had predicted that last month’s inflation would fall to just 8.2%, so it’s lower than expected.
The Office for National Statistics said falling prices of motor fuel was the biggest contributing factor to the changed rate.
And while food prices did rise in June, they increased by less compared to June 2022.
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Commenting on the figures, Mr Hunt said: “We can see that the prices charged by producers are coming down.
“We want to make sure that supermarkets and other retailers are passing those on to families as quickly as possible, because people are feeling a lot of pressure.”
The Chancellor added: “If you combine that with what the Bank of England are doing with monetary policy, what the Government is doing in terms of being responsible with public finances, you can see that we will be successful in bringing down inflation.
“That’s starting to happen. There’s still a long way to go and we’re going to stick to the course.”
Energy Secretary Grant Shapps said inflation remains “far too high” but is at least “moving in the right direction”.
“We’ve been doing a lot of things to try to support people through this period of high inflation caused by the shock in energy prices,” the minister said.
“It is good to see that that is starting to pay dividends with inflation coming down to 7.9%.
In happy news for struggling households, the Resolution Foundation think tank said decreasing inflation should ease pressure on both mortgages and pay packets.
It also ends the UK’s 18-month period of falling real wages.
Britain is now less of an outlier in the battle to control spiralling prices compared to the rest of the world.
But it still remains the highest of the G7 states.
James Smith, Research Director at the Resolution Foundation, said: “Today’s chunky inflation rate fall – the joint second largest this century – offers some unambiguously good news after months of disappointing data on the state of the economy.
“The scale of the fall will ease pressure on mortgages and wages, with the Bank of England less likely to keep interest rates higher for longer, and Britain’s latest 18-month pay squeeze is coming to an end.
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“The UK still has one of the highest inflation rates of any advanced economy, but after today it merely looks bad rather than a basket case.
“That is a very welcome improvement.”