Will families benefit from fall in inflation?

YYesterday it was announced that inflation had fallen from 4.4pc in February to 4pc last month.

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But as families may welcome the decrease in inflation linked to the Consumer Price Index due to falling food and non-alcoholic drink prices, there are warnings for people in Norfolk and Suffolk not to expect a economic revival, especially for rural communities and the elderly.

The latest inflation figures show prices of bread, cereals and fruit fell by up to 4.7pc as stores cut prices in an attempt to attract customers.

But in a direct contrast people in villages and market towns can easily notice how the cost of running a car or heating their home seems to carry on its inexorable rise.

Prices at the pump rose by 2.7pc in a month as the Libya crisis drove the price of oil up.

And as rural areas are feeling the rising costs there was also other economically-depressing news yesterday that the region’s stores may have seen their worst fall in sales since records began.

The British Retail Consortium said it had recorded its deepest fall in sales since 1996 with high street sales falling 1.9pc in March compared to the same month last year.

However, as sales slumped internet sites seem to have done a booming trade as sales were 7.5pc higher than a year ago – although the rise was lower than February’s increase of 10.4pc.

The fall in spending is seen as an strong indication of how families are feeling the pinch because of what the consortium called uncomfortable high inflation and low wage growth.

So should the 4pc inflation rate for March and lower prices for food provide crumbs of comfort for people in the region?

Jon Clemo, chairman executive of the Norfolk Rural Community Council, is not convinced and then issued a warning that the day of £2 for a litre of petrol maybe inevitable.

He said: “I think hopefully we will begin to see an economic recovery soon – the challenge is the pace of that recovery. The cost of petrol and heating oil is rising and I have seen nothing in the latest figures that shows they will fall. We could break the psychological barrier of seeing £2 for a litre of petrol – it is case of when and not if.”

Mr Clemo said that a strong indica-tion of the rise in living costs was people putting off hiring workmen to work on extensions, conservatories and installing windows.

Linda Gill, information, advice and advocacy manager for Age Concern Norfolk said that for elderly people in the county there was no sign of the end of the economic downturn tunnel.

She said: “I would say it is still too early to say. At the moment people are being hit from all sides.

“Once people retire there is not much leeway for them, apart from using savings – which are affected by low interest rates.”

The issue of low interest rates will continue to pose problems for the foreseeable future as the monthly fall in inflation will ease pressure on the Bank of England to raise the record low interest rate of .05pc.

And for people expecting low wage increases or who rely on savings to help ends meet it should also be remembered that the 4pc inflation rate is double the target rate set by the Bank of England.

Sylvia Waycot, from Norwich-based Moneyfacts.co.uk, said: “While a fall in inflation is welcome, it won’t change the fortunes of the nation’s savers who are still battling against shrinking spending power and a lack of inflation beating savings accounts.

“Pensioners trying to supplement their incomes with interest will feel the ensuing pain the most.”

However a note of optimism was mooted by Richard Tunnicliffe regional director of the CBI who said the manufacturing sector was beginning to improve.

He said: “I think it is good short-term news.

“Yes the retail sector and the average man in the street are not having a good time with inflation but there is a light at the end of the tunnel.

“We are predicting a 1.8pc to 2pc rise in GDP growth.”