Inflation continues downward trend
THE headline rate of inflation has continued to fall, dropping from 1.7% to 1.6% last month.
It has now declined each month since January and is well below the Bank of England’s 2% target.
The Office for National Statistics (ONS) said the largest contribution came from the falling price of transport, particularly motor fuels, with other smaller downward effects from the clothing and furniture and household goods sectors.
These were partially offset by rising prices linked to restaurants and hotels, and alcohol and tobacco.
The ONS said the Retail Prices Index (RPI) figure – which includes housing costs – grew by 2.5%, down from 2.7% in February.
Petrol prices were unchanged between February and March this year compared with a rise of 2.2p per litre between the same two months a year ago. Diesel prices fell by 0.4p per litre this year compared with a rise of 1.9p per litre in 2013. There was also a smaller downward contribution from air transport where fares rose between February and March but by less than a year ago.
Clothing and footwear prices rose, as usual, between February and March but by less than in 2013. The ONS said the downward effect came from garments, particularly women’s outerwear.
Commenting, Tim Pile, president of Birmingham Chamber of Commerce said: “This fall in inflation is encouraging news for businesses as consumers will have more money to spend and, along with recent drops in unemployment, is another indicator that the UK is on its way back to economic growth.”
However, the chamber said that despite the slowdown in the pace of inflation, the latest Quarterly Economic Survey from the Greater Birmingham Chambers of Commerce showed that 41% of member manufacturers believed the price of goods and services would increase. This is the highest number since 2011.
The QES also showed marked improvements on the domestic front for the service sector across Greater Birmingham with 51% of companies reporting improved domestic sales – the highest since 2007.
“The inflation figure is moving in the right direction and other indicators are beginning to paint a more positive picture. Lower inflation helps boost consumer confidence, and the knock-on effects of this cannot be underestimated,” added Pile.
