Inflation is falling, slowly but surely

The latest data show inflation was running at 1.6 per cent in March, compared with 1.7 per cent in February. Photo: PA

Slowly but surely the main measure of inflation, the Consumer Price Index, is falling. Prices, in other words, are rising more slowly than they have been.

The latest data published a few minutes ago show inflation was running at 1.6 per cent in March, compared with 1.7 per cent in February.

The main reason is that petrol and diesel prices are pretty static at the moment while they were rising quite strongly a year ago.

Smaller rises than last year in clothing and furniture prices have also helped the overall measure.

Inflation is now at the lowest level since 2009. Why does that matter? Well, wages are expected finally to outpace inflation when the latest employment data is published tomorrow.

That should gradually help to cement the recovery as consumers spend more with money they're actually earning, rather than using savings or borrowing.

We'll be examining this is more detail tomorrow.