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25 March 2014

UK inflation hits four-year low at 1.7%

 UK inflation hit a four-year low in February, falling to 1.7%, according to today’s official figures from the Office for National Statistics (ONS).

Having fallen from 1.9% in January, it’s the second consecutive month that Consumer Prices Index (CPI) inflation has been below the Bank of England's 2% target.

Dr Esmond Birnie, chief economist with PwC in Northern Ireland says it’s another ray of sunshine through the sometimes dark clouds of March:

“A number of factors account for the fall: petrol and diesel prices at the pumps fell by an average of 0.8 pence per litre between January and February and there were some household energy cost reductions arising from changes in the Energy Companies Obligation.

“Shrinking inflation helps to accelerate a return to real growth in wages and living standards, with average total earnings up 1.4% in the three months to January, compared with a year ago.

“Employees in the public sector workers saw a rise of just 0.9% in that period, while private sector pay grew by 1.7%, largely catching up with prices.

“That will be some good news for Northern Ireland where the recovery is lagging the other UK regions and where recent reports point to disproportionate levels of fuel and child poverty in the region.

“Overall, the fall inflation consolidates the UK's economic recovery, with any immediate pressure to raise interest rates is also being reduced.

“Nevertheless, some risks remain especially as so much of UK inflation is attributable to external factors, so we should remain wary about the threat to global oil and gas prices associated with the tension between Russia and the Ukraine."

Ends.