UK inflation slumps to lowest level since 2016

Inflation slid to its lowest level for almost three years in August, on the back of tumbling computer games prices and a slowdown in price increases for clothing.

Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) was 1.7% last month, compared with 2.1% in July. This was the lowest rate of inflation since November 2016.

The fall was steeper than analysts predicted, having forecast inflation of 1.9%.

Mike Hardie, head of inflation at the ONS, said: “The inflation rate has fallen noticeably into August, to its lowest since late 2016.

“This was mainly driven by a decrease in computer game prices, plus clothing prices rising by less than last year after the end of the summer sales.”

Prices for recreation and culture were 0.6% down against the previous month, as it was heavily affected by plummeting prices in the volatile games, toys and hobbies category.

The category – which is heavily impacted upon by the calendar for video games – slid 5% against the previous month on the back of heavy discounting.

Clothing and footwear also contributed to the decline, as prices increased by 1.8%, significantly slower than after the end of the equivalent summer sales period last year.

Gamers
Computer games prices fell over the period (Rick Findler/PA)

Meanwhile, package holidays saw inflation slow to 0.4%, while accommodation services saw prices fall by 1.7%.

Alcoholic drink prices saw a slowdown in growth to 0.5%, after beer prices sank by 1.1% and there was a slowdown in inflation in wine prices.

However, food prices increased by 0.6% during the month on the back of rising bread, cereals and meat prices.

The Retail Prices Index (RPI), another measure of inflation, dipped to 2.6% for August from 2.8% in July.

The CPI including owner-occupiers’ housing costs (CPIH) – the ONS’s preferred measure of inflation – was 1.7% in August, from 2% in July.

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