CPI falls again to new record low

The Consumer Prices Index (CPI) has fallen again, to its lowest recorded level.

CPI

The measure of consumer inflation dropped to 0.3 per cent in January, from 0.5 per cent in the previous month.

The fall in the measure has been attributed in part to cheaper fuel, and to a bitter price war amongst the supermarkets.

The change follows December’s fall, which saw CPI hit a record low. The Bank of England has now warned that negative inflation could appear in the coming months.

However, so-called ‘core inflation’, a measure that excludes energy, food, alcohol, and tobacco, rose from 1.3 per cent to 1.4 per cent in January.

Meanwhile the cost of items such as clothing and furniture continue to rise.

The fall in CPI means that Bank of England governor Mark Carney will again be forced to write a letter to the Chancellor explaining why the measure is more than 1 per cent off its official 2 per cent target.

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