Low inflation a sign that ‘economy is struggling’

The Consumer Prices Index (CPI) 12-month inflation rate slumped to 1.3% in December 2019, down from 1.5% in November, according to new data published by the Office for National Statistics (ONS).

Another measure, the Consumer Prices Index including owner occupiers’ housing costs (CPIH), also fell in December – down to 1.4% from 1.5%.

The ONS suggested the largest contribution to the CPIH 12-month inflation rate came from housing, water, electricity, gas and other fuels.

The data suggested the largest downward contributions to the change in the CPIH 12-month inflation rate between November and December came from accommodation services and clothing.

“Low inflation is another sign that our economy is struggling, putting jobs and pay at risk,” commented Trades Union Congress general secretary, Frances O’Grady.

“The Government must do more to support key industries and lay the foundations for higher productivity. No more excuses – the March budget is a vital opportunity for urgent investment to boost growth and living standards across the UK.”

Hargreaves Lansdown personal finance analyst, Sarah Coles, suggested inflation levels continuing to drop meant that savers will have a ‘much easier time keeping their head above water.’

“But the two thirds of people clinging to low lying branches continue to struggle, as their savings lurk deep underwater,” Coles added.

“Around two-thirds of consumers have a savings account with their current account provider. To make matters worse, they’re likely to have had that account for some time.

“Our research shows that 56% of us haven’t switched our account for at least three years, and the longer you hold your account for, the more the rate tends to drop away.”

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