The rate of inflation in the UK dipped 0.2% in May, according to the Office for National Statistics.
The pace at which the cost of goods is rising slowed last month, according to official statistics.
The Consumer Prices Index measure of inflation eased from 3% in April to 2.8% in May, while the Retail Prices Index – which includes mortgage interest payments – fell from 3.5% to 3.1% over the course of a month.
Falling fuel and food prices helped push inflation lower, while travel costs were creating the upward pressure.
Over the course of a year, inflation has fallen by 1.7%.
Why do you care?
It means the cost of living isn’t rising as quickly, which is good news.
People’s incomes and savings have been eroded by inflation over the past year, with the rate peaking at 5.2% in September 2011. With many workers stuck on frozen salaries, money wasn’t stretching as far when buying everyday goods.
Hopefully, with inflation moving closer to the Bank of England's 2% target, forking out for the essentials will become a little easier.
What does it mean for savers?
Anyone depositing money in a savings account should always aim to beat inflation to make a ‘real return’ on their money. This was near impossible at the end of last year when there weren’t any savings accounts that could do it.
According to Moneyfacts there are now 210 savings accounts available that beat inflation. A basic-rate taxpayer needs an account paying an annual rate of 3.5%, while someone paying income tax at 40% needs to find an account paying 4.7%.
Use our savings comparison tool to find the best account for you.
More on savings:
Save to buy: the savings accounts that help you build a deposit
Savers get priority in Government plans to reform banks