Inflation's lowest point since January 2005

16/09/2009

Inflation in Britain hit its lowest last month in nearly five years, but they were still higher than analysts expected.

The Office for National Statistics said inflation measured by the Consumer Price Index fell to 1.6 per cent in August, higher than the predicted 1.4 per cent.

According to analysts the biggest factor pulling interest levels downwards were gas and electricity bills and food prices. They have been revealed to be August's lowest since 2000. Transport costs however did not follow this trend and rose instead.

Although it seems good news, it's not yet certain if this quarter's recovery can be sustained. The governor of the Bank of England, Mervyn King, said inflation is likely to be "volatile" over the next year.

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