July 28 2014 Latest news:

There has been a slight easing of the pressure on hard-pressed families, with the persistent bad weather across the country helping cause a third consecutive month of falling inflation.

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The wettest June since records began more than a century ago contributed to the consumer price index (CPI) rate of inflation falling to a 31-month low of 2.4pc, down from 2.8pc a month earlier, according to the Office for National Statistics.

It means inflation has fallen from a high of 5.2pc in September to within 0.5 percentage points of the government’s 2pc target. The general trend has been down to the waning impact of the VAT hike and falling energy, food and commodity prices.

“The faster-than-expected fall in the CPI is good news for consumers, reducing the squeeze caused by prices rising consistently faster than still very subdued wage growth,” said Tom Stevenson, investment director at Fidelity Worldwide Investment.

“However, June’s rapid fall in the CPI may not be sustained if food prices continue to rise as they have over the past month or so thanks to the US heatwave.

“The oil price has also stabilised recently and the summer sales may simply have been brought forward to stimulate spending during the recent downpours. Inflation has been tamed but not defeated.”

As well as making the pound in your pocket go a bit further, the fall in inflation also spells slightly brighter news for savers.

When inflation was at its peak, it was virtually impossible even for basic-rate taxpayers to get a real return on their savings, once tax had be taken into account.

But today, there are 278 standard savings accounts that basic-rate taxpayers can choose from to negate the impact of tax and inflation, and 160 for higher-rate taxpayers.

However, analysts at Moneyfacts.co.uk said there had still been a negative long-term effect on what it terms “the savings underclass”.

Based on average interest rates, tax and inflation, a basic-rate taxpayer who stashed away £10,000 five years ago would have the equivalent spending power today of just £9,232.

“This fall in the CPI is welcome news, although it is not enough to relieve the general hardship and disappointment that continues to blight savers,” said Moneyfacts spokesman Sylvia Waycot.

“Many people look to their savings to supplement their income when they retire.

“Those prudently saving for a rainy day will find they are still taking one step forward and one step back as their good intentions are dwindled by inflation.

“This news means that there are now only 278 out of 1,122 standard savings accounts that negate the effects of tax and inflation, although the silver lining is that last month there was a choice of only 210 accounts.”

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