Inflation hits four-year low of 1.7%

UK inflation hit a four-year low during February, according to new figures released today by the Office for National Statistics.

Inflation stands at 1.7%, below the Bank of England’s 2% target for a second month in a row.

The fall was largely driven by lower prices at the petrol pump which saw diesel and petrol fall by 0.8p per litre between January and February.

Prices for clothing and footwear have also risen at a slower pace than last year, but the price of books climbed by 6.6% compared to last year.

The figures indicate an overall improvement for households, as the gap between inflation and average wage growth has reached its smallest since 2010.

The last time wages grew faster than inflation was in early 2008, according to the ONS.

British Chambers of Commerce chief economist David Kern said: “The further fall in inflation is good news for businesses and consumers, and will strengthen the argument that there are no immediate pressures on capacity, making it easier for the Bank of England to persevere with low interest rates. At the moment, there is no need to consider tightening monetary policy, as we expect inflation to remain around the 2% target for the next two to three years. The current economic environment of low inflation and low interest rates should make it easier for businesses to plan ahead and invest.”

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