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Inflation shows surprise dip in June

New data from the Office of National Statistics (ONS) reveals an unexpected drop in the rate of inflation in June.

The Consumer Price Index (CPI) dropped from 4.5% to 4.2%, and the Retail Price Index (RPI) was down slightly as well from 5.2% to 5%. Both rates had been expected to remain unchanged.

There was also a sharp fall in core inflation, which dropped to 2.8%, the lowest figure since November 2010.

This comes as good news for the Bank of England, which has insisted that there is little sign of an inflationary spiral and has resisted pressure to raise interest rates in order to control rising prices. However, despite the fall, it is the 19th month in a row that inflation has exceeded the Bank of England's target of 2%.

The ONS has said a sharp fall in prices of games, computer consoles, and electrical products outweighed a rise in food and alcohol prices, which were 0.9% higher over the month.

The Bank of England forecasts inflation to peak at 5% by the end of the year