UK inflation falls below target

Falling food prices have been cited as one of the reasons for inflation dropping below the Bank of England target rate of 2%. The figures have dropped to 1.8% from 2.2% in the last month. The likelihood is that this trend will continue as retailers try to stimulate demand in a slowing market. Some areas of the market, notably electronics and fuel prices have experienced rises, but when recession hits the proportion of our outgoings spent on food is likely to increase as it is far more difficult to cut food consumption than the consumption of non-essentials.
Even credit crunch inflated mortgage fees have dropped this year as mortgage companies try to entice more business, and insurance has followed suit. I have just switched house insurance companies and made a huge saving, it is certainly worth shopping around at the moment - in a telephone conversation one company even said 'what can we do to make this insurance more attractive to you? to which the answer would naturally be 'make it cheaper...'.
The Retail Price Index is naturally linked to inflation but measures the effect on specific goods and services, this month the RPI has just recorded it's lowest ever figure of -1.6% (yes that's MINUS 1.6%).

So things are getting cheaper which is good for consumers, but it also means that companies are cutting margins and may even cut jobs as a result. This is an entirely 'natural' process (in terms of the free market) which forces the manufacturers to make themselves leaner and meaner to compete effectively in the market. Those companies carrying surplus 'weight' will be forced to trim back the waste - hopefully this will see an end (at least in the short-term) to the 'fat-cat' culture of self-reward and lack of concern for the wider business and economy. If only we could extend this concern to the environment too, this recession could have a really positive impact.

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25% house price drop expected
Mortgage safety net
Quantitive Easing
UK budget 2009