Economy: CPI inflation remains below target for eighth month in a row

The CPI (Consumer Prices Index) rate of inflation fell to 1.5% last month.

The CPI (Consumer Prices Index) rate of inflation fell to 1.5% last month. - Credit: PA

Inflation slowed to 1.5% last month as consumers benefited from lower petrol prices and the ongoing supermarket price war.

The figure, which matches the four-and-a-half-year low seen in May, means CPI inflation has now been below its target of 2% for eight months in a row, the longest such run since 2005.

Falling petrol prices and lower food and non-alcoholic drinks provided the largest downward contributions to the overall 0.1% decline in the inflation rate, the Office for National Statistics said.

There was also downward pressure on the prices of furniture and household equipment, helping further to offset rises among clothing and footwear, alcohol and tobacco.

The fall in inflation may ease pressure on Bank of England policy-makers as they consider when to raise interest rates which have been at the historic low of 0.5% for more than five years.

Samuel Tombs, senior UK economist at Capital Economics, said stable energy bills, lower import prices and weak wage growth would enable inflation to fall to as low as 1% by the end of this year and remain weak in 2015.

He said: “Although the low inflation outlook is unlikely to prevent the Bank’s monetary policy committee from raising interest rates entirely over the next couple of years, it should limit the speed at which they rise.”

Most Read

Today’s data showed the RPI measure of inflation, which includes housing costs, also fell last month, to 2.4% from 2.5%.