A steadying of inflation today has turned up the volume on calls for the Bank of England to cut its borrowing rate as a vital route to lower borrowing rates for mortgage payers and firms wrestling rising costs.

Against the backdrop of an unexpected general election, data from the Office for National Statistics for June's performance showed the rise in inflation remained unchanged on the previous month, at a modest 2%.

However, amid a consensus forecast for 1.9% today among analysts, the chances of an August rate cut appear to be receding.

Against that expectation, the Federation of Small Businesses said the 2% figure was "welcome news".

The FSB told followers on X: "With inflation hitting the BoE's target, hopes of a cut in the base rate of interest at the next decision point in August will rise."

Overall, the Consumer Prices Index (CPI) rose by 2.0% in the 12 months to June 2024, while when monitored over a monthly basis, CPI climbed 0.1% in June 2024, matching the rate for June 2023.

Further ONS data today also showed that when factoring in owner occupiers' housing costs (CPIH), the graph rose by 2.8% in the 12 months to June 2024 - a less impressive figure, but no change on the 12 months to May 2024.

The ONS said: "The largest upward contribution to the monthly change in both CPIH and CPI annual rates came from restaurants and hotels, where prices of hotels rose more than a year ago; the largest downward contribution came from clothing and footwear, with prices of garments falling this year having risen a year ago."

Core CPIH (excluding energy, food, alcohol and tobacco) also rose by 4.2% in the 12 months to June 2024, the same rate as in May, while the CPIH goods annual rate fell from negative 1.3% to negative 1.4%, and the CPIH services annual rate rose from 5.9% to 6.0%.

The Confederation of British Industry was quick to react to the new data – and call for a Bank of England rate cut.

Martin Sartorius, Principal Economist, CBI, said: "The fact that inflation is stable at the Bank of England's target will be welcome news for many households as we start to see things return to normal after a period of high price growth.

But he added: "It's worth noting that many have yet to feel the benefit of lower inflation due to the high level of prices, particularly for food and energy bills."

The news "paves the way for an interest rate cut next month," he added, "which would begin to provide some relief for firms and households that are struggling with high borrowing costs.

"Going forward, the Bank's Monetary Policy Committee will be mindful of potential upside risks to inflation in the near-term as the domestic growth outlook improves. They are also likely to move carefully as they assess the impact of the first rate cut in four years."

The trading platform Finalto said that any taming of inflation was causing investors to look at the UK with "fresh eyes".

Neil Wilson, Finalo's Chief Market Analyst, said: "The economy seems to be moving in the right direction and we are handkking higher rates a lot better than expected."

Elsewhere today, sterling has risen by 0.5% to $1.3032, marking its highest level since July last year. Against the euro, sterling edged to a two-year high of €1.1927 and has risen by 2.4% against the dollar so far this year, while climbing 3.3% against the euro.

Additionally, data from the ONS on house prices today showed inflation in the UK picked up in May, as rents continued to rise. The property rise was the third in three months, marking a climb to 2.2% year-on-year in the wake of April's 1.3% rise.

In private renting, rates climbed 8.6% in the year to June, as tenants struggle to find accommodation and landlords' battle to absorb higher buy-to-let mortgage rates.

One Gloucestershire landlord told Punchline-Gloucester.com: "It's not easy for many who may have invested in rental for their future wellbeing. More of us are now looking at selling up as you can see a better return on simply saving any capital put into rental property."