You are here: Home - Household Bills - News -

Lower utility and fuel prices drag inflation to a two-year low

0
Written by:
13/02/2019
Inflation fell to a two-year low last month, as falling utility bills and fuel prices eased pressure on UK households.

Inflation, as measured by the Consumer Prices Index (CPI), fell to 1.8% in January, down from 2.1% in December, according to the Office for National Statistics (ONS).

This means that CPI is now below the Bank of England’s 2% target.

With the latest figures showing the strongest wage growth since 2008, rises in pay are now outpacing inflation.

However, this reprieve may not last long, experts warn.

The energy price cap introduced by Ofgem in January drove gas and electricity prices down, the ONS said.

But an increase to the cap announced last week has already resulted in three major energy suppliers hiking prices from April.

Brexit will also have an impact on the inflation picture in the future.

Mike Jakeman, senior economist at PwC, said: “Were the pound to weaken significantly again, inflation would quickly rise above the Bank of England’s target band as it did after the referendum in 2016.

“Alternatively, if companies were given the certainty they crave over the UK’s future trading relationships, a surge in business investment could act as a mild demand shock that would push up prices.”

Interest rates

Last week, the Monetary Policy Committee (MPC) voted unanimously to keep the base rate unchanged at 0.75%, and today’s inflation data will provide policymakers with more reasons to sit on their hands, experts say.

Kate Smith, head of pensions at Aegon, said: “In order to maintain inflation at its 2% target, the Bank of England’s MPC have kept interest rates unchanged at 0.75% referencing Brexit uncertainty and the wider global slowdown.

“Those expecting an interest rate rise to boost savings, including pensioners, may therefore need to wait until the economic and political landscape has become clearer.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week