LONDON, England: In June, the UK’s inflation rate fell more than expected to the lowest level in over a year.

The data will reduce pressure on the Bank of England to continue its efforts to raise interest rates.

As consumer price inflation growth fell to its lowest level since March 2022, the British Pound weakened and investors scaled back their bets on future increases in borrowing costs.

However, the UK interest rate remained above the rates in other major developed economies.

Economists polled by Reuters had mostly expected a drop to 8.2 percent in the 12 months to June, compared to May’s 8.7 percent.

In May, the central bank said it predicted June inflation to fall to 7.9 percent, significantly more than its 2 percent target, but much lower than October’s 41-year high of 11.1 percent.

James Smith, head of research at the Resolution Foundation think-tank, said, “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,” according to Reuters.

Meanwhile, the Bank of England is predicted to raise rates by a quarter-percentage point on 3rd August, instead of the half-percentage point increase priced in this week, while the Bank Rate is no longer predicted to peak at 6 percent.

Core inflation, which excludes food, energy, alcohol and tobacco prices and is used by the central bank to gauge underlying price pressures, also dropped to 6.9 percent, compared with a three-decade high of 7.1 percent in May.

Economists polled by Reuters had expected the core measure of price growth to hold at 7.1 percent.

Despite 13 consecutive rate increases since December 2021 that have raised the risk of a recession, Bank of England Governor Andrew Bailey has been criticized by investors and former central bank officials after inflation continued climbing higher than predicted.

Prime Minister Rishi Sunak has promised to halve inflation by the end of 2023, before a national election expected in 2024, a target described as “challenging” by finance minister Jeremy Hunt.

Despite the drop in UK inflation in June, the country’s inflation rate remains the highest among G7 economies. Only Iceland had a higher rate of inflation in Western Europe in June.