Households’ cost of living falls as shop price inflation shows drop

THE cost of living has dropped, according to a leading index, despite inflation staying well above the government target.

According to the BRC-Nielsen Shop Price Index, shop price inflation fell 0.1 per cent to 2.7 per cent in August from 2.8 per cent in July.

The figures, which provided a glimmer of economic hope for Chancellor George Osborne as he delivered a keynote speech to the City, also showed that food price inflation slowed to 5 per cent, from 6 per cent in August. However, inflation in the fresh food category remained unchanged at 4.3 per cent and the non-food category reported a slight acceleration in inflation to 1.4 per cent, the first increase since May 2011.

Clothing fell to 1.7 per cent from 1.9 per cent, while furniture dropped to 1.6 per cent from 1.7 per cent and electrical goods also decreased 0.1 per cent to 3.7 per cent. Two of the largest drops were in books, which fell 0.6 per cent, and beauty products, down 0.7 per cent.

Stephen Robertson, British Retail Consortium director general, said: “This is a modest piece of good news for hard-pressed households.”

DAVID MADDOX