Easy does it

Inflation continues to ease, as highlighted by today’s official release showing that the Retail Prices Index is now 2.8% and the Consumer Prices Index is now 2.4%.

Commenting on the figures, Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, said: "Inflation continues to fall as highlighted by the latest official release showing that the Retail Prices Index is now 2.8% and the Consumer Prices Index is now 2.4%. Consumers continue to be squeezed by inflation, but that is easing, and falling fuel prices will be welcomed by both businesses and consumers.

"Heavy discounting by retailers is also helping to keep inflation down, along with falling commodity prices compared to 12 months ago. The figures reveal that the main factors behind the drop in the Consumer Prices Index are retailers’ summer sales beginning earlier than usual with discounting of clothing and footwear.

"Food and drink prices fell slightly over the past month, though there is a risk that food inflation could pick up because of the adverse weather affecting crop yields. Pressure on transport costs has waned with a second consecutive month of falling fuel prices. Inflation will remain low for the rest of this year, though further falls will be more muted and we do not see a risk of a deflationary cycle. Any easing of inflation for consumers will help boost demand, however we must be mindful that household debt levels remain high and there may be a preference to pay down some of this debt even when inflation is low."