The UK's annual inflation rate, as measured by the consumer prices index, dropped to 1.9% in January -- the fall below the Bank of England's 2% target was the first time in more than four years.
The Office for National Statistics said that the fall in the rate resulted from price movements for recreational goods & services, furniture & household goods and alcoholic beverages & tobacco. These were partially offset by price movements for miscellaneous goods & services.
The ONS said that over the last five years, the three main contributors to the 12-month inflation rate have been food & non-alcoholic beverages, housing, water, electricity and gas & other fuels and transport (including motor fuels). Combined, these three sectors have, on average, accounted for over half of the 12-month inflation rate each month. While having a negligible impact on the change in the CPI 12-month rate in the year to January 2014, prices for Housing, Water, Electricity, Gas & Other Fuels accounted for around a quarter of inflation.
Inflation was close to 3% for much of the first half of 2013 and average wages have not overtaken prices since 2008.
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