August's inflation figures offer some respite for householders
INFLATION eased back to 2.7% in August as retailers kept a lid on the prices of new autumn ranges while petrol pump rises slowed, official figures have shown.
The fall in the Consumer Price Index (CPI) from an annual rate of 2.8% in July was also spurred by a lower rise in air fares than last year, according to the Office for National Statistics.
Figures showed a month-on-month increase of 0.4%, which was the lowest August rise since 2009.
Danske Bank chief economist Angela McGowan said the data would ease the pressure on households. "The latest inflation data reveals some support for households as price pressures ease.
Although this month's fall in inflation could easily go unnoticed by most households who are still struggling with stagnant incomes, the new Bank of England Governor, Mark Carney will be relieved.
"The Bank of England's plans to keep interest rates low are not just subject to the UK labour market improving, but also on inflation and inflation expectations staying under control, which would seem to be the case for now."
But the retail price index, a separate measure, rose from 3.1% to 3.3%.
The fall in the CPI rate came as clothing and footwear inflation came in at 2%, compared to 2.8% last year, at a time of year when retailers are introducing new full-price autumn ranges.
Meanwhile, petrol prices rose 2p per litre compared to a rise of 3.5p per litre in the same month last year. Air fares were up 9.4% compared to 10.2% a year ago, with the main downward effect coming from domestic routes.
Upward contributions to CPI came from furniture and furnishings, major appliances and small electrical goods such as fans.
Annual inflation for food and non-alcoholic beverages rose to 4.1% from 3.9% while there were also higher prices for games, toys and hobbies.
This is adding to the pressure on hard-pressed families as wage rises still lag behind the cost of living increases.
Recently introduced experimental measures of inflation such as CPIH, which includes housing costs, and RPIJ, created to iron out the gap formed by the different methods of calculating the price of goods, stood at 2.5% and 2.6%, unchanged from July.
The Treasury said: "The economy is turning a corner, but the recovery is in its early stages and risks remain. The only way to deliver a sustained improvement in living standards is to tackle the economy's problems head-on and deliver a recovery that works for everyone."
Policymakers have been forced to tolerate above-target inflation as they keep interest rates low to try to nurse the recovery back to health.