We've been reporting that overall inflation has dropped to 6.8% in the year to July - but that figure is made up of figures from lots of different categories.

An important one is food and drink, which has seen a much higher rate of price rises - it's dropped to 14.9%, external in the year to July, down from a June figure of 17.4%.

The ONS noted that food prices, particularly milk, bread and cereals, had a "notable" effect pushing the headline inflation figure downwards.

The food and drink inflation figure is itself calculated from a mix of different products and you can see in the graphic below how price increases over the past year have varied across various items.

Image source, .

If you're just joining us, welcome. We're following reaction after the latest inflation figures were announced by the Office for National Statistics.

• Inflation slowed to 6.8% in the year to July - down from a peak of 11.1% in October - largely driven by falling energy prices and food prices rising less quickly
• Prime Minister Rishi Sunak says today's figures show that his government's plans to tackle inflation are working, though Chancellor Jeremy Hunt said "we're not at the finish line"
• Labour noted that people are still "paying more" because of the increased cost-of-living
• The Institute for Fiscal Studies think tank said the PM's target was "in jeopardy"

• Core inflation - a measure which looks at price rises without factoring in volatile food and energy - remained unchanged, the ONS said
• Our economics editor Faisal Islam says the latest figures increase the likelihood of further interest rate rises next month - which will have a knock on effect on many people's mortgages

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As we have been reporting, inflation - the rate at which prices are rising - has fallen sharply for the second month in a row. It's now 6.8% - down from a peak of 11.1% in October last year.

We've been hearing from economists and politicians, but for many of us the key question is: what does it mean for me?

Our personal inflation calculator here, built by the Office for National Statistics (ONS) in collaboration with the BBC, shows you what the new numbers mean for your household.

Kevin Peachey
Cost of living correspondent

It’s worth reiterating that a falling rate of inflation means that prices are still rising, but at a slower rate.

One feature of this period of high inflation is that many of the goods and services that have been rising fast in price are necessities, such as food.

Those on lower incomes will therefore be harder hit, because necessities take up a bigger proportion of the weekly budget.

Ultimately, everyone has their own personal inflation rate. We have a series of guides on how to cope if your finances are under pressure as part of our Tackling it Together series in the cost of living section of the website.

Image source, Reuters

Chief Secretary to the Treasury John Glen says today's inflation rate announcement shows "great progress", but inflation remains "too high".

Speaking to the BBC's Today programme, he says the government is "on track" to hit its target to halve inflation this year.

Asked what the government is actively doing to lower inflation, Glen says it is tightening the purse strings.

"I certainly think, if I was deciding as chief secretary, with the chancellor and prime minister, to borrow a lot more money or to spend a lot more money, it would have an effect on inflation," he says.

He adds that the government is facing "massive calls" to spend money but is refraining from doing so.

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Angela Rayner, Labour's deputy leader has just been speaking to BBC Breakfast.

She says that while inflation isn't increasing at the rate it was, "people are still paying more through the cost of living".

Asked what Labour would do differently to tackle inflation, she says her party would focus on strengthening the NHS workforce to tackle waiting lists - citing ONS figures that suggest "record levels of people out of work because of sickness".

Rayner says Labour would focus on growth via a "long term strategy", looking to tackle the climate emergency and create jobs in industries such as onshore and offshore wind, and carbon capture.

In a word, no.

Inflation is a measure of the rise in prices over time. Falling inflation simply means that prices are rising more slowly than they were earlier. But they are still rising.

A 10% inflation rate means the price of a £1.00 loaf of bread has risen to £1.10 over the past year. A 5% inflation rate does not mean the price has gone down, but that there has been a smaller price rise - to £1.05 over the year.

Falling prices are known as deflation – and can come with their own set of economic problems.

Inflation measures how quickly the prices of goods and services are rising (or, very occasionally, falling).Soaring food and energy bills have been pushing prices up.

Although wholesale gas prices have come down very sharply since last year, they are still much higher than before the Covid pandemic and Russia’s war in Ukraine, helping to push up the cost of living.

The soaring cost of energy has been a key factor driving the UK’s high inflation rate in recent months. Oil and gas were in greater demand as life got back to normal after Covid.

At the same time, the war in Ukraine meant less was available from Russia, putting further pressure on prices.

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Star McFarlane
BBC Breakfast

Wendy tells the BBC that “something has got to change" because people just can’t afford to shop like they used to.

“People are going without food because of rising costs and a lot of it isn’t necessary it’s just for profit.

“My local supermarket, the prices that they’ve put up it’s just ridiculous. Some of the prices are not just going up 10, 20p an item, they’re going up 50p an item or even more than that.”

She says that has changed what she buys and where she shops, including going to the budget supermarket chain Aldi.

“You’ve just got to shop around and do the best you can,” she says.

The Institute for Fiscal Studies has said Prime Minister Rishi Sunak's inflation promise is in jeopardy, in response to the latest inflation figures.

The economic think tank's research economist Heidi Karjalainen says Sunak's target to halve the rate of inflation by the end of the year "was always a little odd as there is only so much the Treasury can do".

Karjalainen explains that the PM may have hoped he could rely on falling energy prices to do most of the work.

However, she adds, "the stubbornly high rate of price inflation for goods and services other than food and energy has put the target in jeopardy".

We can see the tunnel - but light at the end may be a way offpublished at 08:10 British Summer Time 16 August 2023

08:10 BST 16 August 2023

Faisal Islam
Economics editor

The international comparisons show that in July, despite inflation falling everywhere, the UK rate remained higher than comparable economies.

Core inflation in Germany, France, across the EU, and in the US, fell in July, while remaining stuck in the UK.

So what we are left with is the mechanical effect of the peak in domestic energy bills. This should be repeated in October, bringing the inflation rate closer to 5%. Food price inflation has eased but remains very high at 14.8%, so the cost-of-living crisis remains.

But the inflationary genie has spread to other parts of the economy, where it does not tend to fall so quickly.

The PM yesterday said there is “light at the end of the tunnel”. Today’s figures confirm that we can see the tunnel out of this. It may still be some time before the light is reached.

Image source, PA Media

Responding to the latest inflation figures, the Liberal Democrats have called on the government to freeze rail fares and say passengers could face huge hikes in ticket costs next year.

Leader Sir Ed Davey said: "Month after month, families and pensioners are being clobbered by inflation and the buck stops with Rishi Sunak. Now millions will also be stung by terrible rail fare hikes.

"The government must immediately announce a rail fare freeze, alongside extra support for all those bearing the brunt of the Conservatives' economic mismanagement,” he added.

A fall in gas and electricity prices, as well as a drop in the pace of food price rises, are major drivers behind the inflation rate decrease, Mike Hardie of the ONS says.

Around three quarters of the fall in inflation can be attributed to the change in energy prices, he says.

Food prices, despite remaining high, rose by less than a year ago, "particularly for many of our household staples such as milk, bread and cereal," Hardie says.

Core inflation - the measure that strips out some more volatile prices - remains historically high though, he says, adding that this is driven by services prices.

“Prior to 2020, inflation was much lower, so even though we’ve seen a fall from the peak in October which was 11.1%, it still remains high compared to historic rates of inflation,” Hardie says.

But other data points show a general downward trend, he adds.

Prices collected by the ONS from businesses on goods leaving factories and raw materials have been falling in the most recent statistics compared to a year ago, which is generally a “good lead indicator of where consumer price inflation is headed,” Hardie adds.

Next year's rise in English rail fares will be below 9%. The government said yesterday that any increase will be below the rise in the retail prices index (RPI) measure of inflation for the 12 months to July.

Earlier, the Office for National Statistics said that figure was 9%.

The Department for Transport said any change to fares will be implemented in March next year but hasn't said how it will be calculated.

The government used the UK's average earnings growth of 5.9% during the quarter to July 2022 to decide this year's fare increases.

Image source, PA Media

Prime Minister Rishi Sunak says the inflation rate drop this morning shows his government's plan is working.

“As prime minister I am determined to build a better economy and a better country for you, your children and your grandchildren,” he said.

“That starts with tackling inflation. And the news this morning shows that the plan is working.

“If we stick to the plan I’ve set out, we’ll get it done.”

Today's figures increase likelihood of further rate risespublished at 07:37 British Summer Time 16 August 2023

07:37 BST 16 August 2023

Faisal Islam
Economics editor

At first glance, this sharp fall in the rate of inflation to below 7% puts the UK on a path to a more normal economic situation.

The falls in domestic energy bills are causing the headline rate of inflation to come down for a second month in a row.

However, the underlying measures of inflationary pressures across the economy are no longer going in the right direction. Services inflation was back up to 7.4%, the joint highest level since 1992.

This drove the fact core inflation, which strips out volatile food and energy, stopped falling, remaining at 6.9%.

The significance of these measures is it shows how much inflation is left in the economy, after the direct impacts of the energy shock have passed through the economy.

This set of figures increases the likelihood of further interest rate rises in September and perhaps October too.

Image source, .

Can the government meet its inflation pledge?published at 07:29 British Summer Time 16 August 2023

07:29 BST 16 August 2023

Dharshini David
Chief economics correspondent

In January, the prime minister said the government would halve the rate of inflation. The latest available data then had that rate at 10.7%.

The vow raised economists’ eyebrows. The cost-of-living crisis has been rooted in food and energy costs, dictated by global commodity markets.

It’s been exacerbated by rising prices in other sectors; and it’s the job of the independent Bank of England to dampen those by hiking interest rates.

The government has little direct control over inflation.

But, there’s a chance luck could be on the government’s side, as commodity prices have moved in the right direction, and rate hikes take effect.

If that continues, inflation could end the year at just over 5%. But it’s not certain and would still mean prices are substantially higher than at the end of 2022.

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Reacting to the UK inflation rate falling to 6.8%, Labour's shadow chancellor Rachel Reeves said: "Inflation in Britain remains high and higher than many other major economies".

"After 13 years of economic chaos and incompetence under the Conservatives, working people are worse off - with higher energy bills and prices in the shops," she said.

"Labour's plan to build a strong economy will make working people better off by boosting growth, improving living standards and cutting household bills."

Image source, PA Media

Chancellor of the Exchequer Jeremy Hunt is welcoming today's inflation rate announcement, but says the government's work is not finished.

“The decisive action we’ve taken to tackle inflation is working, and the rate now stands at its lowest level since February last year," he said.

“But while price rises are slowing, we’re not at the finish line. We must stick to our plan to halve inflation this year and get it back to the 2% target as soon as possible.”

Most analysts still expect further interest rate risepublished at 07:12 British Summer Time 16 August 2023

07:12 BST 16 August 2023

Dharshini David
Chief economics correspondent

Helping the fall in inflation was a fall in the energy price cap on 1 July and a slowing of the rate at which food prices were rising - although those are still almost 15% higher than a year ago.

While some ingredients have got cheaper, retailers still faced higher bills for the likes of wages and transport - it’s often customers who pay the prices.

Strip out food and energy and so-called core inflation remains close to a 30-year high.

That category includes many non-essentials, suggesting some households still had the means to treat themselves to non-essentials – and it’s that discretionary spending that the Bank of England is aiming at when it raises interest rates.

With inflation still far higher than its 2% target, most analysts expect a further rate rise come September. And it remains uncertain whether the government can fulfil its pledge to see inflation halve over this year.