Inflation maintains downward trend

THE rate of inflation has continued its downward trend, dropping to 2% last month, latest figures show.

Data from the Office for National Statistics shows the Consumer Prices Index (CPI) stood at 2% in the year to December, down from 2.1%
in November.

The biggest factors impacting on the fall came from the prices for food & non-alcoholic beverages and recreational goods & services. Although these were partially offset by a rise in petrol prices.

The ONS said the overall price increase for gas and electricity in December was slightly larger than the rises a year earlier resulting in a small upward contribution to inflation.

Reacting to the fall, Tim Pile, president of Birmingham Chamber of Commerce, said: “Today’s figure hits the Government’s inflation target of 2% and is a positive start to the year, however price rises are still a major concern.

“In the chamber’s Quarterly Economic Survey for Q4 2013, more firms cited inflation as their key concern and said they expected prices to rise in the next three months.”

Nevertheless, he said the figure was moving in the right direction and other indicators were beginning to paint a more positive picture.  However, pay rises are still not keeping pace with the rate of inflation, he added.