Small businesses received a welcome boost this week as the Office for National Statistics (ONS) revealed that UK inflation had fallen to its lowest percentage in four years.
According to the ONS, the UK’s Consumer Price Index (CPI) rate dropped to 1.7 per cent in February. Meanwhile, inflation measured by the Retail Price Index (RPI) fell to 2.7 per cent in the year ending February 2014, down 0.1 per cent from January.
Lower fuel prices have been cited as a critical reason for the UK enjoying its lowest rate of inflation in four years; average petrol prices fell by 0.8p a litre between January and February, compared with a rise of 4p a year ago. Diesel prices also dropped by 0.8p a litre in the same period whereas they went up by 3.7p 12 months ago.
It is the second consecutive month that the rate of inflation has been below the Bank of England’s target of two per cent. In another piece of good news, the ONS also said that average total earning rose by 1.4 per cent in the three months to January.
The closing gap between the increase in inflation and increase in earnings is good news for the UK’s small businesses and their employees. Furthermore, those small companies who rely heavily on logistics can expect to reap the benefits of the lower fuel prices.
John Allan, national chairman of the Federation of Small Businesses (FSB), said: “This lower interest rate marks a positive development for our members as the economy continues to grow. Small businesses are keenly aware of the importance of keeping the cost of doing business down.
“FSB members are also telling us they are beginning to raise staff pay so with this lower inflation rate, workers will begin to see feel the increase of wage rises in their pockets.” 
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