Price rise easing 'will benefit some'

27/10/2008

Some might benefit from the drop-off in inflation which will come with the recession, Defaqto said today.

The comments come in the wake of latest GDP figures from the Office for National Statistics, which showed the first quarterly negative growth in the UK economy since the early 1990s.

GDP was found to have shrank by 0.5 per cent between July and September.

Meanwhile, the government has also revealed that jobless figures have jumped - with unemployment forecast by analysts to rise by 200,000 before the end of the year.

Inflation, however, is widely expected by analysts to ease markedly from its current 16-year high of 5.2 per cent.

Wholesale oil prices - a big driver of the price rises - have slumped, retreating from July's high of $147 a barrel to just under $65 last week.

Petrol has retreated in the UK to below £1 a litre as a consequence

Michael Baxter, economist at Defaqto, said: "The price of oil is crashing at the moment so petrol has already become cheaper and is going to get a good deal cheaper. The price of food is beginning to fall as well. That often happens in a recession."

He added: "Those people who are lucky enough to hang onto their job over the next couple of years might actually find their affordability starts improving."

Tags; Budgeting Advice, Young Family Finances,

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