UK interest rate falls to record low of 0.3% in January and expected to stay low

The rate of UK Consumer Prices Index inflation fell to 0.3% in January, its lowest level since records began.

Cheaper petrol prices and lower food prices, which was helped by a supermarket price war has cut the rate from 0.5% in December to 0.3% last month. This low has boosted Britain’s top share index to climb a 5 month high boosted by increased consumer spending power. Mining companies also continue to rise after their recent earnings reports.

Its figures meant in real terms that a basket of goods and services that cost £100 in January 2014 would have been just 30p more last month, though the ONS said the fall in inflation would have been sharper but for a softer slowdown in the fall of clothing prices.

Ben Brettell, a senior economist at Hargreaves Lansdown said, “The combination of low inflation, rising wages and falling fuel prices are great news for the UK consumer. I believe interest rates will stay lower for longer than the majority of forecasters expect.”