Inflation is rising at the moment, but that doesn't mean all products are rising in price. Check out which goods are getting cheaper.
This week’s inflation numbers were pretty depressing. The government’s favourite measure of inflation – the Consumer Prices Index (CPI) – rose to 4.5% in August, up from 4.4% in July. In other words, prices rose on average by 4.5% over the year to August.
Higher inflation is bad news for most of us but it’s especially cruel to people who rely on their savings to pay their bills. The top-paying easy access savings account pays only 3.18% at the moment – well behind inflation - so it’s very hard for savers to protect their capital against the ravages of inflation.
Silver linings
That said, when you look at the inflation data in more detail, there are a few bits of good news. Some prices are actually falling! So I thought it would be fun to take a look at a few items that are cheaper now than they were in July.
1. Computers and TVs
The official name for this category is Audio Visual Equipment and related products. It doesn’t just include TVs and computers. It also covers CDs, DVDs and cameras.
Overall prices in this category fell 1.5% between July and August. The big fallers were TVs as well as DVDs purchased over the internet. However, digital cameras went against the trend and rose in price.
I guess it’s not that surprising that prices have fallen here. Technology keeps on advancing and that means manufacturers are able to keep on cutting costs.
2. Rail travel
This one is much more surprising. It feels like I’ve read hundreds of articles about rising train fares over the years, but the government’s figures show that rail prices fell by 2.3% between July and August. Apparently, a lot of this was due to falling fares for ‘international rail journeys.’
I suspect that means Eurostar has been offering some cracking special deals for travellers recently.
3. Alcoholic beverages
This was another area that really surprised me. Prices for alcoholic beverages fell by 1.5% between July and August, driven by a 6.4% fall for Spirits. Apparently the supermarkets have been cutting prices for whisky and other spirits. Beer prices also fell by 1.2% over the month.
Sadly, I haven’t benefitted from these price falls. My favourite tipple is wine where average prices rose by 1.1%. Never mind...
4. Books
Book prices fell by 1.6% over the month whereas they rose by 0.3% at the same point last year. I wonder if the rise of the ebook is forcing publishers to price their old-fashioned ‘on paper’ books more competitively.
5. Food
Food prices edged down by 0.1% between July and August. You might think there’s a seasonal explanation for that, but food prices actually rose over the same period in 2010.
Prices for vegetables, bread and cereals all dropped by 1.2% while fruit prices fell by 1%.
It wasn’t all good news though; prices for milk, cheese and eggs rose by 1.1% in August.
6. Mortgage interest payments
People on tracker mortgages have benefitted hugely from the ultra-low interest rates on offer at the moment.
And the good news is that mortgage interest payments fell even further in August. Admittedly, a 0.3% fall in payments isn’t massive, but every bit helps. Interestingly, mortgage interest payments aren’t included in the CPI, but they do show up in another measure of inflation, the Retail Prices Index (RPI), which rose to 5.2% in August, up from 5% in July.
In other words, the slight fall in mortgage interest costs wasn’t enough to push the RPI in a downwards direction. That’s a shame.
So, although I’ve managed to find some positive glimmers of hope in this article, I’m ending on a more downbeat note. Inflation is still rising and it looks set to stay above 4% until Christmas at least. Depressing.