Unexpected fall in inflation to 4 per cent

The Consumer Prices Index dropped by 0.4% in the last month.

By Alice Gribbin Published 12 April 2011

New figures for the cost of living have shown a surprise drop in the annual inflation rate. The Office for National Statistics figures reveal that 4.4 per cent inflation in February fell to 4 per cent in March.

City predictions of 5 per cent were proved wrong due to falling prices in the cost of food and non-alcoholic drinks - having previously risen sharply. Meanwhile the Retail Prices Index measure of inflation also dropped last month, from 5.5 to 5.3 per cent.

With the first fall in inflation since July 2010, the Bank of England are likely to be relieved of their recent pressure to increase interest rates.

However, Darren Morgan of the ONS warned over predictions of a new trend, pointing out that future food costs were unknown and transport costs would continue to rise.

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Tags: Politics News

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4 comments

Tue, 2011-04-12 18:04 — Herbert (not verified)

That's the trouble with inflation - we've got to the stage now where we think 4% inflation is good.

Tue, 2011-04-12 19:42 — Eddy S (not verified)

higher government spending would mean that interest rates would rise more quickly and increase further pressure on inflation i.e. stagflation.

a tighter fiscal policy with looser monetary policy is the most sensible policy for now.

cheap imports and a debt fuelled bling economy sustained from a decade of booming tax receipts from bouyant property and finance sectors provided us with a feel good factor - this is when we should have ran a budget surplus and help provide us with a cushion for when times would be tougher. the problem is that the solution to the 2008 crisis
has made the problems much worse - printing money, near zero interest rates and increasing our debts further would eventually increase inflation - that is why gold prices have been increasing. most buyers of government debt now think that government's will eventually default - we will see much bigger problems in the near future with the eurozone PIGS - - the US is in a very bad situation - the US fed is technically bankrupt and bond markets expecting implicit default.