Consumers got some very good news today. Inflation went falling to a very welcome, as well as, fresh new low in almost four years. This new low was a truly amazing one of 1.7 % in February, which official figures did reveal, and which does finally mean a long end to the existing squeeze that has been placed on real wages for so long.
This fall in inflation was something, which economists were expecting to take place, and the existing CPI had not been this lower since October of 2009 when it was at 1.5%.
Inflation did fall to 1.9% in January, but this was due to, retailers cutting their prices and the presence of lower costs for fuel overall. The very first that the headline rate did fall below the Bank of England’s 2% target in more than four years did finally achieve that specific target in December.
This further decline does reveal that private sector pay growth is something, which was at 1.7% in the three months prior to January, is now already caught up with inflation in a major way.
Nonetheless, total wages are only rising at 1.4%, and ordinary workers from the public sect, are only seeing a rise of 0.9% according to the latest figures that were published and released just last week.
Earnings for workers are definitely something that has not increased at a much higher rate than that of inflation. If anything, they have not improved since 2008, despite a brief spike that was evident in March and April of 2010.
Danny Alexander, who is the Chief Secretary to the Treasury, did have the following to say about these latest figures. “The existing number for today’s inflation is something that is indeed very encouraging in their own way. This is something that does only add to the economic statistics over the last few months that have been very promising.”
Despite the fact that there is much more to be done, and that there are numerous more important decisions yet to be made, these figures do show that the long-term plan to fix the British economy is truly working at last.
“Falling inflation does indeed ease the burden that is being put on family budgets, and also, on the state of the economy itself.” he added.
Is spending power set to rise at last? The answer is one that does look very good. So far, so good.