Inflation falls for a record 6 consecutive months!

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

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).