Finally some good news: CPI inflation rate drops to 3%

Consumers starved for any good news at all finally have a reason to rejoice, with the Consumer Price Index was recently adjusted downward by 0.5 percentage points to a 3 per cent inflation rate – the lowest it’s reached since February of 2010, according to the Office of National Statistics.

In an economic landscape that saw massive inflation and barely-noticeable rates of return on the nation’s savings products, this news is finally some respite for savers scrambling to find a way to make their money work for them.  The Retail Prices Index, a separate inflation measure that takes additional financial data into account, also fell last month to 3.5 per cent, a more modest 0.1 percentage point reduction.

Inflation had been falling slowly but steadily earlier in the year, though grinding to a halt this past March, leading the Bank of England to warn that the 2 per cent target rate it set for the nation’s inflation would be out of reach for an additional 12 months at least.  However, Sir Mervyn King, the governor of the Bank, was finally spared his monthly task of writing to the Chancellor to justify why inflation remained more than 1 percentage point above target for the BoE.

The decline in inflation was traced to easing pressures in the clothing, alcohol, and transport sectors, with sea and air transport experiencing the largest drop.  Sea and air fares rose only 7.4 per cent and 4.2 per cent this year, a much smaller jump than last year’s 22 per cent and 29 per cent jump, mostly attributed to the timing of Easter.

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