The Consumer Price Index (CPI) fell for the third consecutive month to 1.8 per cent in January 2019, its lowest level since January 2017, the Office of National Statistics (ONS) has revealed.

It is a 0.3 per cent decrease on the 2.1 per cent measured in December 2018, and below the Bank of England’s target of 2 per cent.

Combined with the positive trend in the latest wage growth figures, Aegon head of pensions, Kate Smith, believes individuals should find themselves in a strong financial position to save.

“Individuals should find themselves in a strong financial position to set out financial goals and those who can afford to save any additional income should be encouraged to do so.

“For those in workplace pensions, if wage growth continues to outstrip inflation as we have seen in recent months then this should help to absorb some of the costs and mitigate budgeting concerns as minimum contributions for auto-enrolment rise from 5 per cent to 8 per cent in April.”

According to the ONS, the fall in CPI came from falling gas, electricity and other fuel prices between December and January, partially offset by air fares, with prices falling less than they did a year ago.

Brexit uncertainty has meant the Bank of England is looking to keep interest rates at its 0.75 per cent, in order to keep its 2 per cent inflation target.

“Those expecting an interest rate rise to boost savings, including pensioners, may therefore need to wait until the economic and political landscape has become clearer,” Smith added.

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