UK inflation has fallen to a 15 month low of 3.4% through February, the fall is largely attributed to lower gas and electricity bills. Synergy Client Solutions examines what this means for Britain.
The statistics released by the Office of National Statistics (ONS) today have shown that the Consumer Price Index (CPI) inflation has fallen by 0.2% since January. The rating has not been this low since November 2010. The report also suggested that huge sales and discounts among retailers have affected the inflation rate.
Synergy Client Solutions had read in the last couple of days that analysts were expecting the fall to have been slightly greater. An average taken on the forecasts of 36 economists, had predicted that inflation would fall to as low as 3.3% but high alcohol prices, as part of a government drive to curb binge-drinking, had played a factor in stopping the rate fall even further. The prices of spirits rose 2.6 percent in February, this compared to a decline of 5.8 percent in the same period last year is significant. Vegetable and soft drinks prices rose by 3.3 percent and 4.3 percent respectively.
Managing Director Benjamin Jeanes believes that whilst this is a step in the right direction he still has concerns. “Unfortunately we still see inflation higher than wage growth meaning that people are still being squeezed financially. At Synergy Client Solutions we will be interested to see what George Osborne reveals in his annual budget tomorrow where he has promised to help low-income individuals through tax changes.”
Mervyn King, the Governor of the Bank of England has predicted that inflation will slow throughout the rest of the year but some analysts believe that it will stick harder than Mr. King would like.
Mr. Jeanes concludes, “Savers are always hardest hit by inflation rises so things appear to be heading in the right direction for them. Energy bills have been rising to outrageous heights recently, leaving the hardest-up heading towards fuel poverty. We’re relieved that those are gradually falling, and will continue to do so as we head into the summer months. This will be a long road to recovery for the UK and at Synergy Client Solutions we will be evaluating Mr. Osborne’s budget carefully.”