Cost of living is plunging

The cost of living is falling faster than at any time since the Great Depression, official figures revealed today.

The headline measure of inflation — the Retail Prices Index — fell 1.2 per cent last month, a far steeper rate than most economists had been expecting. The accelerating fall in the RPI is being led by plummeting mortgage bills and falling energy and food prices.

The cost of living has not gone into reverse at this pace since official records began in 1948. Unofficial calculations of inflation suggest that prices are going down faster than at any time since 1933, when Britain was still in the depths of Depression and one worker in five was unemployed.

It means the majority of people still in work are better off than they were a year ago. Mortgage interest payments have almost halved since April last year and the Bank of England is likely to keep interest rates low.

Union bosses said employers should not use the RPI fall as an excuse to scrap pay rises.