The rate of inflation faced by households fell to 1.6% in the year to March 2014. The Consumer Prices Index (CPI) – the headline measure of inflation – grew by 1.6% in the year ending March 2014, down from 1.7% in February. Putting the CPI figure into context, a basket of shopping that cost £100.00 in March 2013 would have cost £101.60 in March 2014.
CPIH, the measure which includes owner occupiers’ housing costs, grew by 1.5%, down from 1.6% in February. RPIJ, the improved variant of the Retail Prices Index (RPI) calculated using formulae that meet international standards, grew by 1.8%, down from 2.0%.
The slowdown in inflation came primarily from the price movements of motor fuels. Petrol prices were unchanged between February and March this year compared with a rise of 2.2 pence per litre between the same two months a year ago. Diesel prices fell by 0.4 pence per litre this year compared with a rise of 1.9 pence per litre in 2013.
Other smaller downward effects came from clothing and furniture & household goods. In each case, prices rose between February and March 2014 but by less than between the same two months a year ago.
The most notable, partially offsetting, upward effects came from the restaurants & hotels and alcohol & tobacco sectors. With the former, prices for accommodation services rose by more between February and March 2014 than between the same two months of 2013. With the latter, the upward contribution came principally from spirits.
It is also worthwhile thinking about the sectors that contribute to the actual rate of inflation (i.e. what makes up the 1.6%) in addition to the sectors that contribute to changes in the rate (i.e. what made inflation change from 1.7% to 1.6%). For most recent months, prices in the housing, water, electricity, gas & other fuels sector have been the largest contributor to the inflation rate and currently account for a quarter of inflation. On the other hand, motor fuels are currently having a downward pull on inflation with prices down by 6.6% in the year to March. Average petrol prices were around £1.29 per litre in March 2014 compared with over £1.38 per litre a year earlier.
Source: Office for National Statistics
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