MoneySavingExpert.com homepage
Cutting your costs, fighting your corner
Founder, Martin Lewis · Editor-in-Chief, Marcus Herbert
Search bar closed.
MSE News

Millions see the cost of living drop further

stock_market_crash
Guy Anker
Guy Anker
Deputy Editor & Head of Operations
19 May 2009

The cost of living is now falling fast for some, according to one of the Government's two inflation measures released today.

The Retail Prices Index (RPI), which measures the cost of living over the past year, including mortgage costs, fell from an already negative minus 0.4% in March to minus 1.2% in April.

However, only those whose mortgage costs have plummeted over recent months will feel the force of deflation. The Office for National Statistics, which publishes inflation figures, points out that excluding mortgage interest costs, the RPI index rose by 1.7% over the past year.

Over five million borrowers are estimated to hold a variable rate mortgage, the cost of which is likely to have fallen over the past year due to a 90% drop in the Bank of England Base Rate since October last year.

The Consumer Prices Index, which measures living costs without mortgage costs, was down from 2.9% in March to 2.3% in April. This is still above the Government target of 2% and demonstrates that many are still seeing the cost of living rise.

Dan Plant, savings analyst at MoneySavingExpert.com, says: "Savings rates are far lower than a year ago, but deflation can soften this blow. Even if you’re earning a paltry sum on your cash it could still outstrip the cost of living."

MSE Forum

Deflation hits (for some)

Forum image
Tools and calculators

Clever ways to calculate your finances

Find your odds of getting top cards
Find your odds for getting a cheap loan
Compare broadband, phone & TV deals
Compares thousands of mortgages
Eight calcs to help you work out the cost
We ensure you’re on the cheapest tariff