Inflation dropped last month to the lowest rate since 2010, with the Consumer Price Index (CPI) growing by 1.9% – that’s 0.1% below the Bank of England target.
The Office for National Statistics (ONS) said that price changes for recreational goods & services, furniture & household goods and the alcohol & tobacco sectors were the main reasons for the rate slow-down.
The full report, issued by the ONS stated that food inflation grew by only 0.01% due to tumbling prices of bread and cereal.
Meanwhile, inflation as measured by the Retail Prices Index, which also takes into account house prices, rose to 2.8% from 2.7%.
Annalisa Piazza, senior economist at Newedge Strategy, said:
“All in all, today’s CPI statistics confirm the idea that the Bank of England is unlikely to hike [interest] rates any time soon despite the improved economic outlook.”
The government says that the drop in inflation is a good sign of economic recovery. A spokesperson for HM Treasury said:
“The government’s long term economic plan is working, boosting economic security for hard-working people. the economy is growing, the deficit is falling and more people are in work than ever before.”