UK Cost Of Living Falls Most Since 1948

(Telegraph) – THE COST OF LIVING in Britain last month fell the most since records began more than half a century ago, as the recession drove down the cost of food and housing.

The broad measure of inflation, known as RPI, slumped 1.6% on an annual basis — its steepest decline since statisticians began compiling the figures in 1948. Compared with May, RPI climbed 0.3% — in line with City expectations.

Prices for a range of staples — including meat, bread, fruit, vegetables and dairy products — all fell as retailers sought to keep a lid on prices to attract shoppers.

The figures underline how the recession, which began in the second quarter of last year, has drained pricing power across the economy. The Bank of England has signalled it expects to keep interest rates at a record low of 0.5% in an effort to provide some life support to the economy.

We still believe ‘the bulk of the disinflationary effects of the deep recession in the economy have yet to be seen,’ said Jonathan Loynes, an economist at Capital Economics.