We'll soon be drawing our live coverage to a close. But before we go, here's a look at some of main developments:

• Inflation in the UK dropped to 7.9% in the year to June, according to the Office for National Statistics

• Today's figures came as a positive surprise to some, as economists had expected a smaller drop to 8.2% - after it had been stuck at 8.7% in April and May
• Chancellor Jeremy Hunt welcomed the drop but said the government knows high prices "are still a huge worry for families and businesses"
• Interest rates, mortgage repayments and house prices continue to worry many people. Analysts are predicting that, given the latest 7.9% figure, the Bank of England will add 0.25% to the current interest rate of 5% at the Bank's next meeting in August
• The Liberal Democrats and Labour welcomed lower inflation but criticised the government, saying it should do more to help those struggling

Today's coverage was written by Ece Goksedef, Jennifer Meierhans and Malu Cursino. It was edited by Andrew Humphrey and Aoife Walsh.

Interest rates are predicted to rise less sharply after the UK saw a surprise drop in inflation in June.

The Bank of England has put up rates 13 times since December 2021 to try to cool soaring price rises, driving up borrowing costs for millions.

Experts say it is now under less pressure to act after inflation slowed to 7.9% in June, down from 8.7% the previous month.

To tackle the problem of stubborn inflation the Bank has raised interest rates from near zero to their current level of 5%.

The idea is that by making borrowing more expensive, consumers will spend less and price rises will cool.

Interest rates had been forecast to peak above 6%. But the Bank is expected to raise rates by a more modest 0.25 percentage points at its next decision in two weeks.

Read more: Interest rates: Big rise less likely after inflation fall

Kevin Peachey
Cost of living correspondent

Private rents paid by tenants in the UK rose at their fastest rates since comparable records began in 2016, separate figures from the Office for National Statistics (ONS) show.

The increase of 5.1% across the UK in the year to June was driven by a 5.8% rise in Wales, the data show.

However, today's inflation figures do offer some hope for tenants.

That's because markets have reacted to this news in a way that could eventually reduce the funding costs of mortgages.

If landlords, many of whom have interest-only home loans, see mortgage rates drop, then they could be less inclined to hike rents for their tenants too.

A million households will pay extra £200 a month on mortgagespublished at 11:27 British Summer Time 19 July 2023

11:27 BST 19 July 2023

Dharshini David
Economics Correspondent

With inflation (finally) falling by (a bit) more than expected, economists are scaling back their expectations of immediate rate rises – although they still think they are more in store.

Analysts at Capital Economics, for example, say the drop in inflation is unlikely to be enough to prevent the Bank of England from raising interest rates in early August from 5.00%, although it may tilt the balance towards a quarter point hike rather than half.

They think rates will rise slightly beyond that further out due to the persistence of some inflation pressures – to 5.5%. However, in the absence of this fall in inflation, they say the peak would have been more likely to be above 6%.

So a the pain faced by those due to remortgage may be less acute than it could have been. Even so, a million households will be paying an extra £200 – or more - on their monthly mortgages payments by the end of the year.

Kath Paddison
Digital producer, Wake Up to Money

Image source, Becky Snarsky

A hairdresser in Chesterfield says the rising cost of hair dye and other stock is "crippling the industry".

Becky Snarsky, 39, ran her own hairdressing salon for 20 years and is now a business coach working with hundreds of hairdressers and salons across the UK.

But she told BBC 5 Live’s Wake Up To Money: "We are keeping our fingers crossed everything is going to level out or maybe start declining but we are having to put prices up by 3.6% twice a year."

Economist Mohamed El-Erian says there are several reasons why inflation is higher in the UK compared to other countries.

El Erian, president of Queens' College Cambridge and Allianz chief economic adviser, told BBC Radio 4's Today programme that the UK disrupted its supply chains by "changing our international relationships through Brexit".

Productivity has also been lagging, which means that the supple side "doesn't respond as fast to higher prices", El-Erian explains.

He says the UK has "real wage resistance" and a tendency to "go on strike whenever our wages get eroded a lot, understandably so".

And lastly, he says the central bank "mischaracterised inflation as transitory and responded later than it should have."

On 4 January, Prime Minister Rishi Sunak set out his five priorities for 2023. Top of the list was to halve halving inflation by the end of 2023.

Inflation was at 10.7% in the three-month period between October and December 2022, which means the government aims to reduce inflation to 5.3%.

At the time the PM stated his intentions - in January, many experts already expected inflation in the UK to drop.

But prices have continued to increase since the pledge, and inflation did not drop as predicted between April and May, remaining at 8.7%.

However, in June, it fell to 7.9%, its lowest level in more than a year.

Analysts remain divided about whether the PM's goal will be achieved, external.

• Read more: Sunak's five promises: What progress has he made?

Caroline Rice, a social security campaigner from County Fermanagh, said she was already planning for winter in the middle of summer.

She was speaking after the Centre for Progressive Policy released a report highlighting the responses to the cost of living crisis from Northern Ireland, Scotland and Wales.

The report said a number of factors had contributed to the cost of living crisis in Northern Ireland, including the absence of a sitting Northern Ireland Executive, a reliance on home heating oil and increased private sector rents.

“You are sitting in the summer and it is trying to budget for school uniforms, it is just a consistent draining of your finances,” Rice told BBC News NI.

“I am working, and I am also on universal credit, it is just feels like a long term sucking of energy out of households.

“It is difficult, I am looking towards the winter already, going how can I get £200 to stick in the tank? I have my car to fix, when can I get this money.

“It is constantly juggling money from one month to the next to see if you have enough just to get some oil.”

Image source, PA Media

A little earlier we heard from Liberal Democrat leader Sir Ed Davey, following the latest inflation figures announcement this morning.

Sir Ed told BBC Breakfast the lower inflation rate would be "cold comfort" for those seeing their mortgages, rents and food prices rising.

Davey said the UK was "still lagging" in comparison to other countries and that the government is "just not doing enough".

He highlighted worker shortages and accused the government of not supporting farmers, leading to higher food costs, and of increasing business costs through red tape at the ports, adding that the government "bears some of the blame for this".

Hannah Miller
BBC Breakfast cost of living reporter

Krystan-Grace Sharpe-Young told me she was living her dream working full time as an artist in Manchester until Covid hit.

"I received no financial help from the government whatsoever... so had no other option than to look for a full time job,” she says.

As rising prices stretch her finances further she’s continued to juggle two roles.

The 28-year-old, originally from Nottingham, works in communications for the NHS, as well as creating art.

"I struggle with my two jobs making ends meet," she says.

"I would say there's always that crunch time a week before pay day and I'm good with my finances.

"The NHS covers my rent and bills and basics. Art is food and leisure. It's been hard juggling two full time roles for sure."

She said she works in the NHS from 09:00 to 17:00, and then on her artwork from 17:00 to 21:00.

How will this affect your finances?published at 09:54 British Summer Time 19 July 2023

09:54 BST 19 July 2023

Kevin Peachey
Cost of living correspondent

So we’ve had the official figures, but how is this reflected in your finances?

If you are driving off on a well-earned holiday soon, then the cost of filling up the car with fuel will be quite a bit cheaper than a year ago.

At home, the cost of the grocery shop may feel like it isn’t soaring quite a much as it has been - although many essentials are still rising sharply in price.

Energy bills have fallen - although the latest drop came too late for these figures.

But, despite all that, prices and the cost of living are still rising relatively rapidly and, particularly for those on lower incomes, the impact on our budgets is significant.

Let's take a minute to catch up with this morning's key developments.

The UK inflation rate dropped to its lowest in a year to 7.9% for the 12 months to June, according to the Office for National Statistics.

Here's what you need to know:

• The rate of overall price rises of goods and services in the UK are finally slowing
• Economists had been expecting a smaller drop to 8.2% after inflation was stuck at 8.7% in April and May, as it falls from highs of 11.1% in October
• Chancellor Jeremy Hunt welcomed the inflation figures but said the government wasn't complacent. He said the government knows high prices "are still a huge worry for families and businesses"

• Analysts are predicting the Bank of England, which tries to bring inflation down by adjusting interest rates, will add 0.25% to the current rate of 5% at the Bank's next meeting in August

Chancellor Jeremy Hunt says prices are still rising "much too fast" and that "there is a long way to go" in the battle against high inflation.

But he says that the government is "utterly determined" to stick to its plan to bring down inflation.

We've heard this morning that the pace of rising prices in the UK has fallen to its lowest level in more than a year. But prices are still high and everyone’s cost of living crisis is affecting them in different ways.

As you answer some optional questions, our interactive guide will explain why you're being affected, what help is available and offer tips on how to save money. Try it out here.

Rishi Sunak says halving inflation is his "top priority".

Writing on Twitter, the prime minister says rising prices drive up the cost of living and "eats into the pounds in your pocket".

Sunak also acknowledges the UK still has a "lot of work to do but we'll get there if we stick to the plan".

"We have to halve inflation. I'm working hard to get it done".

Interest rates not expected to go above 6%published at 09:00 British Summer Time 19 July 2023

09:00 BST 19 July 2023

Faisal Islam
Economics editor

There’s been a sharp reaction in the financial markets to today’s inflation numbers.

It has seen a big reversal of some of the troubling moves in recent weeks that helped push up fixed mortgage costs.

Markets are no longer expecting interest rates to peak above 6%, and they are betting on a more modest 0.25% rise next month.

The all important two year gilt yields, a measure of the effective cost of government borrowing for a two-year loan, fell sharply this morning below 5% to 4.84%.

It peaked at 5.5% earlier this month, as traders bet interest rates would be forced higher by a Bank of England struggling to contain inflation.

Much of that pressure is unwinding, in the absence of further inflationary surprises today. These lower fixed borrowing costs for government, should help reduce two-year fixes for mortgages in the coming weeks too.

Elaine Doran
Cost of living producer

Laura McLelland is a mum of three from Scorton in Lancashire who told me she’s been trying to save money on household bills to give her family a fortnightly treat meal.

“I am just trying to reduce the washing in the house, trying not to put the light on, or put the cooker on twice a night, just trying to be outside more with my children,” she says.

Every two weeks the family has a chippy tea.

“I put the money aside so I know I’ve got it. I’ve got a budget. I sort of think, right I’ve got to put that aside because everybody needs a treat now and again don’t they.”

But she says she feels like she’s “working more hours and getting less pay”.

“My little one goes to nursery and my other one goes to school so I work around school time which works for me – that’s what you’ve got to do.”

Businesses welcome inflation droppublished at 08:38 British Summer Time 19 July 2023

08:38 BST 19 July 2023

Felicity Hannah
Presenter 5 Live’s Wake up to Money

Today's slowdown in inflation will be welcomed by businesses, which have been struggling with higher costs, higher wage demands from workers and a squeeze on customer spending power.

Inflation was not the only news in town this morning; we also heard this morning that there was a 27% increase in business insolvencies in June, compared to the same time last year.

However, it is difficult to know how many of those are a response to the current economic challenges and how many are simply a hangover from covid, when government support kept many companies afloat.

Certainly, bosses will be hoping today’s inflation number is a sign that more normal economic times are on the horizon.

One small food manufacturer told Wake Up To Money that Covid followed by high inflation has been like a storm that never stops, suggesting some business owners are not just struggling to balance their books but also to find the energy to continue after several tough years.

However welcome today’s slowdown in inflation may be, it is still a long way off the Bank of England’s 2% target for inflation, which means that more rate rises could be on the way.

What could this mean for mortgage rates?published at 08:27 British Summer Time 19 July 2023

08:27 BST 19 July 2023

Kevin Peachey
Cost of living correspondent

On the face of it, today brings better news for anyone worried about rising mortgage rates.

That’s because the core inflation rate - the measure that strips out some more volatile prices - has fallen more than expected.

Markets may now consider it less likely for the Bank of England to further raise interest rates sharply - which, in turn, affects the cost of funding mortgages.

But it isn’t as simple a calculation at that.

Policymakers may think this policy of higher rates is working, and stick to their guns.

It would take a very brave person to call the peak in mortgage rates. Irrespective of that, they will remain much higher than the ultra-low levels homeowners have been accustomed over the last 10 years or so.

Other countries are also experiencing a cost-of-living squeeze - but not as much as the UK.

Some of the reasons are the same - energy prices, shortages of goods and materials, and the fallout from Covid. But the annual inflation rate for countries which use the euro is estimated to be 5.5% in June down from 6.1% in May., external

Inflation has been falling in the US too - it is less than half that of the UK. Inflation was 3% in the year to June, according to data, from 4% in May.

That was down from 4.9% in April and marked the 11th month in a row that price increases had eased. In an effort to curb rising prices, the US central bank has increased its key interest rate to 5.25%, up from near 0% a year ago - and the highest level since 2007.

So, why are there differences? Some economists say Brexit is a factor. Trade is not as easy now between the UK and the EU, helping to push up food prices, and there is less competition. Brexit also contributed to labour shortages which began during the Covid pandemic - although Covid was the main factor there. Fewer people in work means workers have more power to ask for pay rises, and this helps push up inflation.

Climate change has also helped push up food prices due to shortages of vegetables after extreme weather hit crops in Spain and Morocco. Higher energy prices also led to farmers cutting down the amount of crops they produce.