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Inflation falls to four year low

The Momentum UK Team 25 March 2014

Figures show that inflation fell to a four year low of 1.7% last month, due in part to a drop in fuel prices.

This is the second consecutive month that CPI (consumer price index) inflation has been below the Bank of England target of 2% - it reached 1.9% in January.

Average petrol prices dropped by 0.8p a litre between January and February, compared with a rise of 4p a year ago. According to the Office for National Statistics (ONS), diesel prices have fallen by the same amount.

Average total earnings rose by 1.4% in the three months to January, compared with the same period last year. Public sector workers saw an increase of 0.9%, while private sector pay increased by 1.7%.

Prime Minister David Cameron saw the figures as an endorsement of the government’s economic plan, tweeting:

“Our long term economic plan is helping provide stability and security for hard-working people.”

However, others say that the economic recovery is not yet being felt by ordinary people. Jafar Hassan, personal finance expert at uSwitch.com, said:

“The inflation figures may look impressive, but are a stark contrast to the challenges facing those still struggling to make ends meet. Despite the Government’s optimism, an overwhelming number of us are yet to see any signs of economic recovery in our back pocket.

“Household bills – especially rent, childcare and energy - have continued to soar, while the average pay rise across the UK is expected to be just 1% this year[3]. To make ends meet, people are being forced to cut back on basic essentials such as heating, food and healthcare.”

Momentum