Inflation continues to fall
THE rate of inflation has continued to decline in the UK, boosted by lower fuel costs, latest figures show.
The Office for National Statistics said the Consumer Prices Index (CPI) – the headline measure of inflation – grew by 1.7% in the year to February 2014, down from 1.9% in January.
Putting the CPI figure into context, a basket of shopping that cost £100 in February 2013 would have cost £101.70 in February 2014.
CPIH, the measure which includes owner occupiers’ housing costs, grew by 1.6%, down from 1.8% in January. RPIJ, the improved variant of the Retail Prices Index (RPI) calculated using formulae that meet international standards, grew by 2.0%, down from 2.1%.
The ONS said the slowdown in inflation came primarily from the price movements of motor fuels. Petrol prices fell by 0.8p per litre between January and February this year compared with a rise of 4p per litre between the same two months a year ago. Similarly diesel prices fell by 0.8p per litre this year compared with a rise of 3.7p per litre a year ago.
Other smaller downward effects came from gas and electricity, clothing and air transport. In each case, prices rose between January and February 2014 but by less than between the same two months a year ago.
However, upward pressure came from the furniture & household goods and recreation & culture sectors. Furniture prices rose between January and February but by more than a year ago. For the latter, the upward contribution came from data processing equipment and books.
The figure now indicates the slowest rate of annual rises since October 2009 and well below the Government’s 2% target.
Greater Birmingham Chamber of Commerce said the downward trend of inflation would be welcomed by consumers and most businesses although manufacturers may struggle to maintain prices as raw material costs rise.
Tim Pile, president of Birmingham Chamber of Commerce, said: “Combined with recent signs that pay growth is once again beginning to increase, with average earnings increasing 1.4% in the three months to January, we are hopeful that households will soon be feeling some relief after the strained years of recession and slow economic growth.
“This latest fall appears largely driven by a decrease in the pace of food price rises and a fall in petrol and transport costs. However, whilst good news for consumers, a large number of businesses are continuing to feel the pressure of increased costs of raw materials and overheads.”
He said the chamber’s first Quarterly Economic Survey for 2014 had shown 41% of manufacturers in the area predicting an increase in costs over the next three months.
“Whilst we are hopeful that the stronger pound will continue to bring down goods inflation we would encourage businesses struggling with costs to seek advice on accessing new income streams, markets and ways of working,” added Pile.
