The UK's cost of living has received a welcome reprieve in June, with significant reductions in diesel and petrol prices offsetting the strain on household finances. Diesel prices plummeted by almost 17 pence per litre to reach 167.14p, a staggering decline from 183.75p just a month prior – the largest monthly drop in over two decades, according to data from the RAC.
The downward trend extends beyond diesel, with petrol prices decreasing by 8 pence per litre, falling from 159.37p to 151.40p. This substantial reduction is directly linked to the 20% decline in global crude oil prices during June, which has had a ripple effect on the UK's fuel costs.
Additionally, mortgage interest rates have dipped, with the average cost of a fixed-rate UK mortgage decreasing to 5.52% for both two-year and five-year loans – down from 5.68% and 5.63%, respectively, at the start of June. This easing in borrowing costs is likely influenced by falling oil prices and lower inflation expectations among investors.
The Bank of England's forthcoming credit conditions survey may provide further insight into lending trends, while experts caution that mortgage rates remain elevated compared to pre-conflict levels – with two-year fixed residential mortgage rates averaging 4.83% before the conflict began.
The impact on the UK economy is expected to be substantial, particularly for commercial vehicle operators reliant on diesel fuel. Lower operating expenses could translate into reduced prices across supply chains, benefiting households and businesses alike.
While these developments offer some respite from the cost-of-living crisis, experts stress that a full return to pre-conflict rates will require further falls in oil prices. The UK Government will continue to monitor economic indicators closely as it navigates the ongoing challenges faced by British nationals.
Source: RAC