Drop in inflation recorded - commercial mortgages

18 November 2008

Inflation has dropped to 4.5 per cent, the latest figures from the Office for National Statistics (ONS) have revealed.

This level represents consumer prices index inflation for the year leading up to October.

It shows a 0.7 per cent fall compared to September's figure, which stood at 5.2 per cent.

The ONS stated that the drop was driven by a "sharp fall" in the price of oil and a "large contribution" from cheaper food and non-alcoholic beverages.

Food price drops were mainly caused by lower costs for meat such as beef and pork products, it noted.

A decreasing rate of inflation gives the Bank of England more incentive to reduce interest rates - something that could have an effect on the cost of commercial mortgages.

Many sceptics will "no doubt be surprised" at the speed at which prices have fallen after the recent Bank of England base rate cuts, stated Ian Kernolan, an economist for Royal London Asset Management.