Inflation slumped back to zero in the year to August, down from a rise of 0.1 per cent in July, figures from the Office for National Statistics show, making seven months of little or no inflation. The costs of food, energy and imported goods have been falling, pulling inflation away from the two percent target.
Even stripping out some more volatile components—energy, food and tobacco—‘core’ inflation fell to one per cent, easing pressure on the Bank of England to raise interest rates. Tomorrow’s jobs figures are expected to show strong private sector pay growth, but jobs growth seems to be picking up in higher-pay and higher-productivity sectors, decreasing inflationary pressures as more wages are chasing more output. As Fraser said last month, it all points to a very slow crawl back to normality.