Inflation falls to 3%

Inflation fell further in January, newly-released figures from the Office for National Statistics have shown.

During the month consumer prices index (CPI) annual inflation slowed to three per cent, which was a 0.1 per cent drop from December’s level.

And retail prices index inflation, which includes homeowner loan repayments, fell from 0.9 per cent to 0.1 per cent during this period.

This now stands at its lowest rate since March 1960, with mortgage interest payments and house depreciation being identified as major factors in the decline.

Falling fuel prices were named as a contributor to the fall in CPI inflation, as the average price of petrol was reduced to 86.3p per litre.

Commenting on the news, Liberal Democrat shadow chancellor Vince Cable remarked: “It is becoming clear that for the foreseeable future there is a higher risk of deflation than inflation.”

This may prompt the Bank of England to cut interest rates further, something that could help people working towards becoming debt free.

By Jamie Price