It is believed that the rate of inflation – which indicates how fast prices are rising compared to the previous year – is slowing as a result of lower food, fuel and clothing costs; with the Office for National Statistics reporting that clothing and footwear was the biggest contributor to the recent fall in inflation, with prices being 4.2 percent lower.
Although inflation is still above the two percent target set by the Bank of England, CPI has been falling steadily since peaking at 5.2 percent in September last year; and it is widely believed that this latest fall could prompt the Bank of England to inject additional money into the economy via its quantitative easing programme.
The Economic Secretary to the Treasury, Chloe Smith said of the latest figures: “Inflation has more than halved since September, meaning a little less pressure on family budgets.
“This lower inflation should support high street spending and growth in the economy in the months to come.”
In addition to a fall in CPI, the Office for National Statistics have also revealed via their latest figures that the Retail Prices Index – which unlike CPI includes housing costs – has also fallen from 3.1 percent in May to 2.8 percent last month.
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