Oil slump leads to fall in inflation

17/02/2009

The rate of inflation has declined at the fastest rate seen in 50 years as the slump in crude oil prices has led to dramatic falls in transport and energy costs.

New benchmark figures show that the Retail Price Index declined by 1.3 per cent over the course of January, taking the annual increase to 0.1 per cent, the lowest it has been since March 1960.

The figures show that low crude prices have led to falls in a host of derivatives and associated products such as petrol, DERV and heating oil.

Earlier this week, EDF also announced that it would be reducing its energy tariffs to take into account the crude price slump.

British energy majors all raised their prices in mid-2008 as crude prices climbed to record levels, hitting $147 a barrel on July 11th.

However, the industry has since come under sustained pressure from the government and consumer groups to bring energy prices down.

Heating oil prices have fallen in line with crude since reaching a peak of more than $4 a gallon.