The UK’s consumer price inflation rate fell further than expected, to 2.4% in April, according to the Office of National Statistics (ONS).
The fall to 2.4%, from 2.8% in March, represented the first fall since September 2012, as lower petrol prices and air fares offset rising food prices.
The price of diesel fell by up to 4p per litre at the pumps in a welcome boost for hard-pressed motorists, who have been repeatedly squeezed by below-inflation wage rises.
The retail prices index measure of inflation fell to 2.9% from 3.3% in March.
Concerns remain about the rise in food prices, which have risen by 40% in six years. The persistent cold weather in early 2013 is thought to have dented supply.
Today’s figures somewhat embarrass the latest Ernst & Young Item Club report, which declared that inflation would not fall below 2.5% until at least 2016.
However Azad Zangana, European economist at Schroders, agreed that the April dip was only temporary.
"Looking ahead, next month's inflation release will also include further falls in energy prices," he noted.
"However, these are unlikely to continue, which is likely to push inflation higher again in following months."
Money falling in value. Households need an extra £603 to maintain their standard of living from last year.
Cost of Inflation "Billions"
The Item Club report said that prices would remain above wages "for the foreseeable future", stating that high inflation had cost the UK economy £10 billion since 2010 (read more).
It has also been disastrous for savers, following the launch of the Government's Funding for Lending Scheme in August 2012.
Retirement income specialists, MGM Advantage, said that UK households have needed to find £15.75 billion – or £603 per household – to maintain the same standard of living from just one year ago.
Even people who have seen rises in their pay packets will be suffering, said sales director, Aston Goodey, as these rises are failing to keep pace with inflation.
"Goods and services costing £100 in 2003 would now cost one third more, or £133.89, with inflation averaging 3.2% a year, which shows just how damaging inflation can be over time," he said.
This stresses the importance of finding a solution that protects retirees on fixed incomes from inflation, he added.
"Over 90% of people have annuity incomes which are fixed when they retire, which means their real spending power over time is reduced."
Keith McDonald
Which4U Editor
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