Inflation dips below 2 per cent

Inflation dips below 2 per cent

Inflation dips below 2 per cent

First published in News

Some respite has been offered to Britain’s squeezed households after inflation fell below the Bank of England's two per cent target for the first time in more than four years.

The Consumer Prices Index (CPI) dipped to 1.9 per cent in January from two per cent in December, prompting experts to herald the start of a long run of below-target inflation in what will help ease the burden on family finances.

January's fall in inflation also boosts the Bank of England’s case for keeping interest rates at record lows of 0.5 per cent.

Economists forecast that inflation will remain under the two per cent target throughout 2014, raising hopes that wage growth will finally overtake rises in the cost of living.

Wage increases remained less than half the rate of inflation, at only 0.9 per cent, in the last set of official figures for the three months to November.

But it is thought that rises in earnings and falling inflation will see real wages increase this year.

The drop in inflation marks the first time CPI has fallen below the Bank’s two per cent target since November 2009.

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