The Office of National Statistics has announced a fall in CPI annual inflation for March down to 4% from 4.4% in February.
The figures were influenced largely by a fall of 1.4% in food and non-alcoholic drinks prices for February to March and in particularly fruit where prices tumbled by 4.7% - a record February to March movement.
The figures support the decision by the Bank of England last week to yet again hold interest rates by continuing with the 0.5% Bank Rate which has now not changed for over two years since it was halved from 1% in March 2009.
However, the British Retail Consortium also released its BRC/KPMG retail sales monitor which showed a fall in total sales of 1.9% on an annual basis – the biggest fall since the records began in 1995.
BRC Director General Stephen Robertson said: “Falling disposable incomes and the fear of worse to come means people don’t want to spend.”
Whilst businesses, retailers and lobbying groups such as the British Retail Consortium were pleased that the Bank of England’s Monetary Policy Committee had listened to their pleas for leniency last week there is still nervousness about when a rate rise will come as despite the new figures inflation is still running at twice its target level and some believe a rise could come by August.
For the moment though retailers and businesses can only wait and see when the predicted rise of between 0.25% and 0.75% before the year is out actually arrives.