20
Jan
Inflation drops to 3.1 per cent
The consumer prices index (CPI) inflation fell from 4.1 per cent to
3.1 per cent, the Office for National Statistics has
revealed.
Discounting of shoes and clothing in the run-up to Christmas was
listed with a major factor in the trend, alongside the VAT cut,
lower petrol prices and cheaper cars.
The recent drop from last September's peak of 5.2 per cent may
suggest that CPI is in danger of falling below the two per cent
target set by the chancellor, something that may prompt more cuts
in interest rates.
Such a move may in turn lead to cheaper mortgages.
Last week Bank of England deputy governor Sir John Gieve suggested
it may be necessary to trim the base rate further, despite it
already being at an all-time low of 1.5 per cent.
He said: "In setting policy, the authorities both here and overseas
need to consider whether further action on interest rates, or other
monetary measures, or fiscal action is required."
