UK’s inflation falls below the target at 1.9%

The UK’s inflation rate, as measured by the consumer prices index, fell to 1.9% in January for the first time in more than four years, the ONS revealed.

The rate of inflation faced by households was 1.9% in January 2014. The Consumer Prices Index (CPI) – the headline measure of inflation – grew by 1.9% in the year ending January 2014, down slightly from 2.0% in December 2013.

This is the first time since November 2009 that inflation has fallen below the Government’s target of 2.0%. Putting the CPI figure into context, a basket of shopping that cost £100.00 in January 2013 would have cost £101.90 in January 2014. There was a comparable drop to 1.8% from 1.9% in the rate of inflation as measured by the CPIH measure which includes owner occupiers’ housing costs.

Price movements in recreational goods & services, furniture & household goods and alcohol & tobacco sectors were the main contributors to the slow-down in the rate of inflation. Price movements in the miscellaneous goods & services sector partially offset these downward contributions, the ONS highlighted.

The fall is likely to underline the Bank of England’s message that there is no rush to raise interest rates.

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