A report by the Organisation for Economic Cooperation and Development revealed inflation slowed in major developed countries in February. This coincides with a steep drop in energy prices in the UK and globally.
Energy supplier SSE recently announced plans to freeze domestic gas and electricity prices until 2016. This is good news for consumers. The move comes after many of the big six UK energy firms raised their tariffs at the end of last year amid criticism.
SSE chief executive, Alistair Phillips-Davies said, “delivering the lowest possible energy prices to customers is central to everything we do.” He went on to say; “One of the biggest concerns they (customers) have is that energy prices may well be going up again. The most important thing for our customers over the next couple of years is freezing prices.” Other energy suppliers have also introduced price-freeze tariffs to help consumers save money on their energy bills.
The report by the Organisation for Economic Cooperation and Development said consumer price inflation slowed to 1.4% in February compared to 1.7% in January in all member countries. Low inflation can put off consumers and businesses from purchases in the hope cheaper deals will become available at a later date. This in turn can damage growth.
The danger of a drop in prices is ‘deflation’ which can be difficult to reverse and can cause the economy to remain stagnant. In February, the U.S. inflation rate was 1.1% whilst the European Union’s was at 0.8%. This is below the 2% average economists deem a suitable level.
The Organisation for Economic Cooperation and Development pointed out excluding volatile food and energy prices, the core inflation for its members was stable for the fourth month in a row.
Lower energy prices usually have a positive impact on the economy, with more money to spend and stimulate growth. But as a consumer or a business owner you may be facing financial problems and cannot see a way forward. If you are worried about paying your energy bills as well as your mortgage and credit card bills, don’t have sleepless nights.