The inflation rate in the UK continued to fall last month, dropping to 3.4% – the lowest it has been for more than a year.
The drop in inflation has largely been put down to energy companies lowering the cost of their gas and electricity prices.
The reduced rate of inflation was announced by the Office for National Statistics (ONS), and has dropped by 0.2% from January this year – when it stood at 3.6%.
Retail Price Index (RPI) inflation fell to 3.7% – down from 3.9% in January. The drop has been put down to the cuts in prices by energy companies such as E.ON and Scottish Power coming into effect.
Non-food retailers were also slashing prices, as they tried to entice cash-strapped consumers. The ONS has said that this also contributed to the fall in inflation.
“For many households, today’s inflation figures will be very good news,” said Mark Gregory, Legal & General’s Executive Director of Savings.
“Our latest figures show budgeting to meet short term needs has become the immediate concern of ten million households up and down the country. This means that across the UK over three million more households were saving for short term needs such as paying the bills since this time last year,” he continued.
The drop in inflation is a step in the right direction for the economy, but the fall was slightly less than some economists had been expecting.
“The Bank of England is hoping that it’s going to fall to 2% by the end of the year,” said Chris Williamson, Chief Economist at Markit.
“The fact it’s been a little bit stickier than we hoped this month really casts further doubt on the Bank’s projection.”
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