Data release Wednesday showed inflation in the UK dropped to 7.9% in June. But BoE Ramsden warns it still remains way too high.

Following May's hotter-than-expected 8.7% reading, economists surveyed by Reuters predicted an annual rise in the headline CPI of 8.2%; nonetheless, annualised price hikes continue to surge over the Bank of England's 2% objective.

The headline CPI climbed by 0.1% monthly, less than the 0.4% consensus estimate. Although it decreased from a 31-year high of 7.1% in May, core inflation, which excludes volatile energy, food, alcohol, and cigarette prices, remained stable at an annualised 6.9%.

According to information released on Wednesday by the Office for National Statistics, motor fuel price declines had the most significant negative impacts on the CPI annual rate's monthly change. In comparison to the same month last year, food costs increased in June, albeit only slightly.

On Wednesday, John Glen, the chief secretary of the Treasury, said on CNBC that the inflation rate's larger-than-expected fall was "very encouraging."

But there isn't any complacency at the Treasury, he said. "We're working closely and in lockstep with the Bank of England as we try to halve it this year and get it down to its long-term norm of 2%."

As a result of a rising cost of living and a competitive labour market, the U.K. has seen persistently high inflation that both the government and the Bank of England have warned might become embedded in the economy.

High salary settlements were hurting their attempts to control inflation, according to U.K. Finance Minister Jeremy Hunt and Bank of England Governor Andrew Bailey, who both spoke to an audience in the City of London earlier this month.

As the Monetary Policy Committee tries to control demand and keep inflation under control, the Bank of England increased interest rates last month by a whopping 50 basis points, marking its thirteenth straight increase.

The markets are barely pricing in another aggressive half-point boost to 5.5% at the MPC's August meeting after the U.K. base rate increased from 0.1% to 5% during the previous 20 months.

However, Sir Dave Ramsden, the deputy governor of the Bank of England, has issued a warning that inflation is still "much too high".

Ramsden stated that further interest rate increases are imminent:

“Although it has started to decline dramatically, CPI inflation is still much too high.

The MPC has often emphasised that choices regarding monetary policy would take into account the possibility of more prolonged strength in domestic wage and price pressures.”

(Sources: cnbc.com, reuters.com, theguardian.co.uk)