Inflation is continuing its steady march downwards, slipping to 1.6% in March from 1.7% the previous month. This is now the sixth month price rises have slowed, the longest fall since the Office for National Statistics started keeping tabs in 1997.
For cash-strapped consumers, the good news is positively steaming off the presses. The EY Item Club said yesterday it thinks wage rises will finally outstrip inflation this year, while economists are predicting ONS figures out tomorrow will show just that.
More manna for Chancellor George Osborne, then, who has been under attack from Labour leader Ed Milliband over the ‘cost of living crisis’. The figures vindicate Bank of England governor Mark Carney too, who is determined to keep interest rates low despite falling unemployment and other good economic news.
However, with Eurozone inflation a meagre 0.5% in March and US inflation figures out later today expected to show it creeping up but still below the Fed target of 2%, policy makers shouldn’t get too ahead of themselves soon. Falling prices are good for consumers, until everyone waits for better bargains and a vicious spiral of Japanese-style deflation sets in.