UK inflation rate falls to 1.9%

The Office of National Statistics’ Phil Gooding attributes the fall in inflation to cheaper tobacco.

16:15 18 February 2014

UK’s January 2014 inflation rate, which is measured by the consumer prices index, has fallen to 1.9per cent. Phil Gooding from ONS said that this is partly because of cheaper tobacco. It was also due to falling cost of recreational and cultural activities.

This is the first time that it fell below Bank of England’s 2% target in more than four years.

Prime Minister David Cameron has reacted to the news saying that the lower-than-expected inflation rate is in line with the government’s economic strategy. He tweeted: "Today's fall in inflation is more evidence our long term economic plan is working. We want to ensure a secure future for hard-working people."

Meanwhile, Labour said that the lower inflation rate is unlikely to have much of an impact on working people. Shadow Treasury minister Cathy Jamieson said: "This small fall in the inflation rate is welcome, but with prices still rising much faster than wages the cost-of-living crisis continues.”

On the other hand, BBC Chief economic David Kern said that fall in inflation could be a good thing. He explained: "An economic environment of low inflation and low interest rates allows people and firms to plan ahead, as they can be confident they will not encounter any unwelcome surprises.”