Official figures show cost of living hasn’t changed year on year.
The Office for National Statistics (ONS) has revealed that the Consumer Prices Index (CPI) measurement of inflation dropped to 0% in August.
The figure, which shows how the cost of essentials have changed over a year, was down from July’s rate of 0.1%.
The ONS said a smaller rise in clothing prices during the month, compared to a year ago, was the main contributor to the fall.
Drops in the price of motor fuels, sea fares and food costs also played a part, with oil prices hitting a six and a half year low of around $42.50 per barrel in August.
However, rising prices for soft drinks as well as furniture and furnishings partially offset that fall.
What it means for your money
[SPOTLIGHT]Inflation has been virtually flat for a while now thanks to a combination of falling commodity prices and intense competition in the retail sector.
This period of 'noflation' means that the cost of living in general hasn’t really changed compared to a year ago.
In fact, according to the Centre for Economics and Business Research (Cebr), 'noflation' has boosted average earnings by a whopping £500, as the falling price of essentials has come at the same time as rapid wage growth.
It pointed out that inflation averaged 1.5% in 2014, and estimated that it will average just 0.3% this year. However, if CPI had hit the Bank of England’s 2% target in each of these years, inflation-adjusted earnings for the average worker would be a massive £560 less.
The Cebr argued that containing the cost of living is a great way to drive up standards and boost economic growth, providing the risk of deflation – where the inflation figure drops below 0% for an extended period – is properly managed.
What do you think? Do you feel better off than a year ago? Let us know your thoughts in the comments box below.
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