UK inflation dropped to 1.2% in September, lowest rate in five years

UK inflation dropped down to 1.2% in September from 1.5% in August, measured by the Consumer Price Index (CPI), according to the Office for National Statistics (ONS).

This is the lowest rate of inflation in the UK since September 2009 (at 1.1%).

The ONS said that low food and energy prices helped reduce the rate, in addition to cheap transport costs.

Ben Brettell, senior economist at Hargreaves Lansdown, told the BBC:

“With inflation predicted to fall further in the coming months, those hoping for a pre-election interest rate rise are highly likely to be disappointed,”

The CPI all goods index annual rate in September was 0.2%, down from 0.6% in August. The CPI all services index annual rate dropped down to 2.4% in September, down from 2.7% the month before.

The large downward effects came from:

Transport – prices dropped by 2.4% between August and September. The fall in prices were across the whole sector, although most notables in air fares and sea fares.

Recreation & culture – prices went down slightly between August and September, compared to an increase between the same two months a year ago. A lot of the downward contribution came from price movements for technological goods, computer accessories, game consoles, and computer games.

The ONS stated that there were no notable upward contributions to the change in the CPI 12-month rate between August and September 2014.

UK CPI September

Source: “Consumer Price Inflation Detailed Briefing Note, September 2014” Office for National Statistics