UK inflation dropped to a record low of 0.3 per cent in January, according to Consumer Price Index figures released by the Office for National Statistics. Cheap petrol and low food prices brought the rate down by 0.2 per cent from 0.5 per cent in December.
January’s Consumer Price Index figure for inflation is the lowest since records began in 1988.
The Bank of England has already said that a short period of deflation, also known as negative inflation, is probable at some point during the second quarter of this year.
The inflation rate when measured by the Retail Price Index is higher, at 1.1 per cent. It, too, dropped from December when it was 1.6 per cent.
Statistician for the Office for National Statistics, Phil Gooding, said that the price of petrol fell during January, along with the price for milk, fruit, games and toys. The price of alcohol slowed, rising at a slower rate than in previous months, which also added to the overall low rate of inflation. The price of furniture and clothes, however, rose.
Lower inflation is great news for the consumer according to Howard Archer, chief economist at IHS Global Insights. He believes consumers will see their purchasing power improve during 2015, with earnings growing and inflation falling still further.
Core inflation actually rose during January, from December’s figure of 1.3 per cent, to 1.4 per cent. Core inflation does not include food, fuel, tobacco and alcohol prices. Howard Archer said that the fact that core inflation is rising shows that the UK is not heading for a lengthy period of deflation.
George Osborne, Chancellor of the Exchequer, said that January’s low inflation rate was a milestone for the UK economy.
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