Britain sees deflation again in October as wine and spirits get cheaper

Cheaper wine and spirits helped keep the UK in deflation territory for the second month running in October, official figures have shown.

The Consumer Prices Index benchmark remained stuck at -0.1% last month — the ninth month in a row that the Bank of England’s benchmark has been hovering around the zero mark, according to the Office for National Statistics.

The latest bonus for consumers comes on top of plunging oil and food prices, which have driven down the cost of living over the past year while employees’ wages finally pick up.

Among the factors keeping the CPI in negative territory was a 0.4% fall in alcohol and tobacco prices between September and October, likely to have been driven by supermarket price-slashing.

The figures marked the first time prices have fallen in this category between a September and October since 2009 — last year prices rose 0.6% — while it was also the biggest fall between the two months since the ONS’s records began in 1996.

Over the month spirits — mainly the whisky and vodka used as loss-leaders by supermarkets — dropped 3.9% against a 1.3% rise last year.

Wine also fell more steeply than last year, while tobacco costs rose more slowly, dragging down the rate of inflation.

Food prices also fell again while the impact of university tuition fees was much less, offsetting higher clothing and footwear prices and dearer games consoles.

The figures put little pressure on the Bank of England to raise interest rates imminently.

Deloitte chief economist Ian Stewart said: “Falling prices of essentials, including food and energy, are delivering a windfall bonus to UK consumers, bolstering spending power and enabling consumers to spend more on cars and big ticket items.

“This reduction in prices, combined with rising real incomes and ultra-low interest rates, should help the UK recovery plough on despite the headwinds from emerging markets.”