Money

Inflation is falling, slowly but surely

Slowly but surely the Consumer Price Index is falling, and inflation is now at the lowest level since 2009. Why does that matter?

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Falling inflation: The key points

  • The largest contribution to the rate fall came from lower petrol prices, utility bills and clothing and footwear
  • Furniture and household goods became more expensive
  • Books were 6.6% dearer on the year
  • Tablet computers and printers were more expensive
  • Inflation in food and non-alcoholic drinks fell to 1.8%
  • CPIH - a new measure of inflation - fell to 1.6%, down from 1.8% in January
  • RPIJ fell to 2%, down from 2.1% in January.

More: Inflation falls to four-year low

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Petrol prices helps inflation fall to new four-year low

Lower petrol prices helped inflation fall to a new four-year low of 1.7% in February, official figures showed today.

Lower petrol prices helped inflation fall to a new four-year low of 1.7% in February, official figures showed today. Credit: Lewis Whyld/PA Wire

It marks the fifth monthly slowdown in a row.

Petrol prices dropped 0.8p per litre between January and February this year, compared with a 4p rise for the same period in 2013.

Read: Treasury: Falling inflation 'a sign our plan is working'

The Consumer Prices Index rate fell from 1.9% in January as it continued to fall short of the Bank of England's target of 2%, the Office for National Statistics said. CPI has not been lower since October 2009, when it stood at 1.5%.

The fall in inflation to 1.7% was widely predicted and suggests private sector pay growth - which was also 1.7% in the three months to January - has already caught up.

However, total wages are only rising by 1.4%, with ordinary public sector workers seeing a rise of just 0.9%, according to the latest figures.

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Inflation 'set to dip below 2%' Bank of England target

Inflation is set to dip below the Bank of England's 2% target for the first time in more than four years, because retailers have slashed prices alongside lower fuel costs.

Many economists believe official figures today will reveal a fall in the Consumer Prices Index (CPI) to 1.9% last month from 2% in December, which will mark the first time inflation has dropped below the target since November 2009.

It follows last month's aggressive discounting by food and general merchandise retailers, with high streets seeing widespread deflation.

Osborne's words on minimum wage 'mean nothing'

ITV News Deputy Political Editor Chris Ship has tweeted:

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Given we are still waiting on Low Pay Commission for its recommendation on Minimum Wage - Osborne's words mean nothing. Positioning. Is all

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Is Low Pay Commission's job to advise on how far Min Wage can rise without affecting employment. Due mid-Feb. Osborne trying to get credit

Watch: Clegg stumbles after being asked what the minimum wage is

Read: Osborne signals minimum wage rise

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