Inflation falls for a record 6 consecutive months!

Inflation falls for a record 6 consecutive months!

16:45 PM, 15th April 2014, About 8 years ago 4

Text Size

Consumer Prices Index (CPI) inflation reduced for a record sixth month to 1.6% for the year to March 2014.Inflation

That means you now need to spend on average £101.60 to buy the same things 12 months ago. This sounds bad, but it is predicted to be the first time inflation will fall below average wage increases since 2008 when the latest figures are released.

Therefore in theory our buying power will increase for the first time since the “Credit Crunch” (is this the beginning of the end of the recession for real people).

The good news good news story is that the economy is growing, we seem to have demand lead growth and all well within the target inflation figure of 2%. This will take the pressure off any concerns for now about the need to raise interest rates and hopefully encourage stable growth. A word of caution though is that the world economy in general is still unstable so I would still look to be cautious on a month to month basis.

The official ONS statistics show the decrease in inflation came primarily from motor fuels with petrol prices unchanged between February and March this year compared with a rise of 2.2 pence per litre between the same two months a year ago. Diesel prices fell by 0.4 pence per litre this year compared with a rise of 1.9 pence per litre in 2013. Clothing and furniture & household goods also had a small positive effect on inflation.

We do need some inflation as it is an indicator of increasing demand and growth, and without it would be very difficult to repay the UK’s debts and could lead to stagnation as we are seeing in some parts of Europe.

Overall this is encouraging for business and also for Landlords with economic factors pointing in the right direction for their customers (tenants) and their costs (interest rates).

CPI Inflation

 



Comments

by Dan Smith

10:03 AM, 16th April 2014, About 8 years ago

Good article and good points made. This will be seen as good news for households, where prices have risen faster than average incomes since the financial crisis.

Meaning families have not been able to buy as much with the money that comes in.

Lower inflation means this may be about to turn around....

by Neil Patterson

10:08 AM, 16th April 2014, About 8 years ago

Reply to the comment left by "Dan Smith" at "16/04/2014 - 10:03":

Now the pound has recovered, fuel and food have stopped (temporarily) increasing we are seeing a closer reflection of real underlying inflation.

by Dan Smith

11:02 AM, 16th April 2014, About 8 years ago

What do you mean about the pound Neil?

by Neil Patterson

11:10 AM, 16th April 2014, About 8 years ago

Reply to the comment left by "Dan Smith" at "16/04/2014 - 11:02":

Good question Dan sorry for not explaining.

The pound has increased/recovered in value over the last few months on the foreign exchange rates.

Before that we were suffering from it costing more in pounds to buy foreign exports such as petrol.

Now the pound is worth more we can buy more petrol with our pounds hence it is cheaper and inflation stays lower.


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER