The UK inflation rate fell to 1.5% in August as the cost of petrol, food and non-alcoholic drinks declined, the Office for National Statistics said.
It means inflation has been below the Bank of England’s 2% target for 8 months, the longest stretch since May 2005. The Bank will now be under added pressure to consider raising interest rates from their record low of 0.5%.
Prices of food and non-alcoholic drinks fell by 1.1% - the steepest fall since 2003 – as competition between rival supermarket chains pushed down prices. However, the gains were offset by a rise in the cost of clothing, transport services and alcohol. It means that a basket of goods and services which cost £100.00 in August 2013 would have cost £101.50 in August 2014.