Inflation in February fell to 1.7 per cent from 1.9 per cent the previous month and a high of 2.9 per cent in June, taking it to the lowest level since October 2009, according to official figures released today (March 25).
Figures from the Office for National Statistics (ONS) show that the rate of inflation fell for the second consecutive month below the Bank of England’s 2 per cent target, having dipped to 1.9 per cent in January.
According to the ONS, the fall was mainly driven by a drop in fuel prices, with the average price of petrol falling by 0.8p per litre between January and February, compared with a rise of 4p at the same time last year. Meanwhile, diesel prices also dropped by 0.8p compared with a rise of 3.7p the year before.
The price of clothing and footwear had also increased at a slower pace than at the same time last year, the ONS said, while energy bills had also had a downward effect on the inflation rate.
The fall in the rate of inflation means that the gap between pay increases and the rise in prices is narrowing and the Chancellor claimed in his Budget speech last week that earnings would overtake inflation this year.
Earnings in the private sector, excluding bonuses, are already outpacing inflation for the first time since the financial crisis, rising by 2.2 per cent in the year to December, according to figures from the ONS published last week.
Meanwhile, during the three months to January, average earnings rose by 1.4 per cent compared with the same time in 2013, and public sector workers also saw a modest rise of 0.9 per cent.
However, the growth in private sector pay was 1.7 per cent over the period, meaning that it has already caught up with the increase in prices, leading Prime Minister David Cameron to tweet that the figures support the Government’s economic strategy.