Qualified advisers answering your
Financial Questions
call 0800 092 1245

Inflation rate falls to 1.5%


The annual inflation rate fell to just 1.5% in August, according to the Office for National Statistics (ONS).

Some of the major factors which have resulted in the falling rate of inflation are the costs of amenities such as food and petrol, which have decreased in recent months due to a supermarket price war.

The ONS, who publish the official inflation data said: “Falls in the prices of motor fuels and food and non-alcoholic drinks provided the largest downward contributions to the change in the rate".

Inflation was measured at 1.6% a month earlier in July, which is already below the Bank of England target inflation rate of 2%.

Samuel Tombs, a senior UK economist at Capital Economics claimed that factors such as stable energy bills, lower import prices and low wage growth meant that inflation could “fall to as low as 1% by the end of this year”.

Interest rates could increase

As price growth has continued to fall in recent months, the Bank of England has remained hesitant to increase interest rates. However, the Monetary Policy Committee (MPC), who are in charge of setting interest rates were split for the first time in over three years.

The MPC consists of nine members, two of which voted to increase interest rates this month and seven who voted to keep them the same. The reason these two members gave for voting to increase interest rates was that they “noted that the continuing rapid fall in unemployment alongside survey evidence of tightening in the labour market created a prospect that wage growth would pick up".

However, despite the prospect of interest rates being increased, Chris Williamson, chief economist at Markit claimed that rates are likely to remain low for the foreseeable future.

He said: "The downturn in inflation provides policymakers with greater leeway to keep interest rates on hold for longer while the economy continues to recover."

Need financial advice?

If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.

Share this..

Related stories

Financial Guides

Financial Calculators

Our useful calculators can help you get your finances in order:

Latest News


Helpful new tax year facts that could affect you and your money

Blog | Seven helpful new 2016/2017 tax year facts that could affect you and your money. Our recent online blog shares a brief outline on how to stay up to date.

Read more

Useful Links

Popular Searches

Please Enter More Details

Enter More Details