Inflation in the United Kingdom dropped by more than anticipated in June and came in at its lowest in over a year, according to official data Wednesday that is likely to ease some of the pressure on the Bank of England (BoE) to keep on raising interest rates sharply to provide potential relief for struggling households.

The inflation, as measured by the consumer prices index (CPI), fell to 7.9% in the year to June from 8.7% the previous month, the Office for National Statistics (ONS) said, marking a 15-month low. Most economists had expected a more modest decline to 8.2%.

The sterling weakened against the U.S. dollar and the euro as the ONS said the consumer price inflation growth rate was its lowest since March 2022 but stayed above the pace of price growth in other big, rich economies.

The statistics agency said the falling of fuel prices was the biggest driver behind the drop, while food price inflation also pared back, though they remained historically high.

Economists polled by Reuters had forecast the CPI rate in the 12 months to June would drop to 8.2% from May's 8.7%, moving further away from October's 41-year high of 11.1% but still far above the BoE's 2% target.

The BoE said in May it expected June inflation would fall to 7.9%.

"Overall, the U.K. will probably still have higher rates of inflation than elsewhere for a while yet, but at least the U.K. is now following the global trend," Paul Dales, chief U.K. economist at Capital Economics, said.

The Bank of England, like other central banks around the world, has been raising interest rates over the past 18 months or so, firstly as a result of supply chain problems linked to the coronavirus pandemic and then by Russia's invasion of Ukraine, which led to a sharp rise in energy and food prices in particular.

However, inflation in the U.K. has proved stickier than in other wealthy nations within the Group of Seven (G-7) for a number of reasons.

Many economists blame Britain's departure from the European Union as one reason for impeded trade. Others blame the BoE for being too slow in raising interest rates, which help dampen inflation by making it more expensive for consumers and businesses to borrow.

"The U.K. still has one of the highest inflation rates of any advanced economy, but after today it merely looks bad rather than a basket case," said James Smith, research director at the Resolution Foundation. "That is a very welcome improvement."

Investors reeled in bets for more interest rate hikes from the BoE. Markets now show a 25-basis point rise next month is likelier than a 50-basis point increase, which had been priced in on Tuesday.

Bank Rate peaking at 6% is no longer fully priced, which had been the case on Tuesday.

Core inflation – which excludes food, energy, alcohol and tobacco prices and which the BoE uses to gauge underlying price pressures – also dropped by more than expected, coming in at 6.9% from May's 7.1%, its joint highest in more than 30 years. Economists polled by Reuters had expected the core measure of price growth to hold at 7.1%.

Food price and nonalcoholic drinks price inflation slowed to 17.3% – still a major strain on the finances of many households – from 18.3% in May.

The BoE is expected to raise interest rates for the 14th time in a row on Aug. 3, having already increased its base rate to 5% in May from 0.1% in December 2021.

British Prime Minister Rishi Sunak earlier this year promised to halve inflation by the end of 2023 before a national election expected in 2024, a target that Treasury chief Jeremy Hunt has described as challenging.

"Inflation is falling and stands at its lowest level since last March, but we aren't complacent and know that high prices are still a huge worry for families and businesses," Hunt said after the figures were released.

The opposition Labour Party, which is riding high in opinion polls, has accused Sunak's Conservative Party of presiding over a "mortgage catastrophe" as homeowners see their borrowing costs jump.

Services prices, also monitored closely by the BoE, rose by 7.2% in annual terms, slowing from 7.4% in the 12 months to May.

There were signs of a weakening of inflation pressure as factory gate prices rose by just 0.1% in the 12 months to June, the weakest reading since December 2020.

Manufacturers' input prices fell by 2.7%, the biggest fall in almost three years. The Reuters poll of economists had pointed to an increase of 0.5% in output prices and a fall of 1.6% in input prices.

The way energy subsidies are repriced every six months is also considered among the reasons why inflation has fallen more slowly in Britain than in other countries.

But the BoE has expressed concern that strong wage growth may keep price growth higher for longer than its forecast for inflation to fall to just over 5% in late 2023 before dipping below its 2% target only in early 2025.