Cost of living slides thanks to Christmas price cuts
Wednesday 18 January 2012
The sharpest slide in the cost of living for nearly three years offered some relief for squeezed household wallets yesterday, amid festive price-slashing and easing pressure from petrol prices and energy bills.
December's fall in the Bank of England's consumer prices index (CPI) benchmark from 4.8 per cent to 4.2 per cent – the biggest drop since April 2009 – heralds a year of steeply falling inflation after four years of wages trailing well behind the cost of living.
The fall should ease any remaining concerns at the Bank of England over lingering inflation and paves the way for rate-setters to give another boost to a struggling UK economy through quantitative easing – in effect printing money – next month. The recent price cuts by the "big six" energy companies will also feed through to lower inflation in the months ahead.
Petrol prices dropped by an average of 1.1p last month compared with a 3.2p rise a year earlier, dragging down the inflation rate according to the Office for National Statistics.
Gas prices also held steady during December, while retailers were forced into deeper Christmas discounts than last year. Clothing and footwear prices fell by 2.8 per cent between November and December as womenswear prices were slashed.
Even bigger falls in inflation are expected next month when the VAT rise to 20 per cent – introduced by George Osborne a year ago to help tackle the deficit – falls out of the figures.
Despite the cheer on inflation, figures today are set to reveal a fresh rise in unemployment after hitting 2.64 million in the quarter to October.
- 1 Kim Jong-un shows off airport designed by architect he likely had executed
- 2 Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
- 3 German ethics council calls for incest between siblings to be legalised by Government
- 4 Fifty Shades of Grey author E.L James's Twitter Q&A didn't go exactly as planned
- 5 Facebook rainbow profile pictures likely being tracked by social network
Kim Jong-un shows off airport designed by architect he likely had executed
Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
Ex-Scientologist Carmen Llwyelyn blasts 'cult' and her treatment after divorce with Jason Lee
German ethics council calls for incest between siblings to be legalised by Government
Tunisia attack: 'Paralysed' police let gunman run amok for half an hour, says witness
The moment a Queen's Guard soldier lost it and drew his gun at annoying tourist
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Pentagon accuses Russia of 'playing with fire' over nuclear threats towards Nato
They are neither a 'state' nor 'Islamic': Why we shouldn't call them Isis, Isil or IS
Tunisia beach attack: How can British Muslims respond to the latest outrages?
iJobs Money & Business
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...
Negotiable: Recruitment Genius: This extremely successful and well-established...
Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...