The rate of inflation in the UK, the Consumer Prices Index (CPI) fell to 2.8% in May 2012, from 3% in April 2012.

This was largely due to slowing fuel/oil (commodity) and food prices. The Retail Prices Index (RPI), which includes mortgage interest payments, also fell from 3.5% to 3.1%.

This latest fall in inflation is good news for the UK as it shows us the quantitative easing the bank of England had employed to get the economy going is working. In fact there is a chance the Bank of England may be encouraged to pump more money into the economy as a result of these figures. There has even been talk of a further cut in interest rates.

On a practical point of view, fall inflation means we all feel like we have more money in our pockets. Lower petrol prices over the past month or so, slowing household fuel bills over the summer months should help the budget stretch a little further. For the UK economy that’s also good news.

If you are interested in this sort of thing then there is a really good UK economy tracker on the BBC website, which you can see here:

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Blog by Jaskarn Pawar

Jaskarn Pawar is an experienced and award winning Chartered and Certified Financial Planner. He advises people all over the UK on financial planning and wealth management issues to help them reach solutions to fit their personal needs. You can contact Jaskarn on 01604 211234 or by e-mail on