This was more than twice the 1.3 per cent fall for the UK as a whole. However, despite this, the overall price level in the capital remains higher than any other UK region. All 12 UK regions recorded a decline in retail prices over the past 12 months.
Mortgage interest payments have placed the greatest downward pressure on retail prices over the past year, falling by an average of 39 per cent. The capital’s average inflation rate dropped by more than elsewhere between 2008 Q1 and 2009 Q1 largely because mortgage interest payments account for a greater proportion of a Londoner’s total weekly expenditure (12 per cent) than in any other region (UK average of 9 per cent).
Additionally, if mortgage interest payments had been excluded from the Halifax measure of regional inflation then retail prices in the capital would have increased by 5.4 per cent over the past 12 months.
Suren Thiru, Halifax economist, said: “All UK regions have seen their retail price inflation rate turn negative over the past year, driven by mortgage interest payments that fell, on average, by more than a third. Those living in the capital have benefited most from the significant drop in mortgage interest payments, resulting in a bigger overall fall in retail prices in London than anywhere else in the UK.”
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