Sharp falls in petrol and diesel, supermarket price wars and cheaper clothing have all helped to pull down the UK’s inflation rate to 0% in August, down from July’s rate of 0.1%, according to the Office of National Statistics. Economists have said that the lack of inflation would continue to boost consumer spending, the main driver of economic growth in the UK.
Ian Stewart, Chief Economist at consultancy Deloitte, said that the latest inflation figures have a beneficial impact on the UK economy as it pointed to more support for consumer confidence. “With the price of essentials like food, transport and fuel down sharply on a year ago, inflation is flat on its back.” He also states that “with inflation rates for next year sliding, the Bank of England is under no pressure to hike rates. Consequently, low inflation is the Bank of England’s trump card in coping with the effects of weakness in China and choppy equity markets.”