Cost of living falls to the lowest it has been in 2 years.

January saw the cost of living fall to a two year low as a result of cheaper energy bills and lower fuel costs.

The Office for National Statistics said the Consumer Price Index (CPI) was 1.8% in January, down from 2.1% in December. The fall was much bigger than economists' forecasts and comes as latest data shows wages rising by 3.1%.

The cost of living fell as wholesale energy prices plummeted, cutting heating bills for millions of households. There were also steep falls in petrol prices, down 2.1p month on month, and lower hotel costs also helped reduce pressure on prices, the Office for National Statistics said.

The largest factor in January's CPI fall was as a result of the biggest ever monthly fall in gas prices since records began in 1988, which coincided with the start of energy regulator Ofgem's cap on household bills.

Energy prices had been rising a year earlier, before steadily falling over the course of 2018. Between December 2018 and January 2019, consumer prices for gas fell by 8.5%, the biggest fall in three decades.

As wages are rising at 3.1%, Tej Parikh, senior economist at the Institute of Directors, said the lower inflation was a "boon" for the economy as it attempts to weather the effects of uncertainty from Brexit.

"For the past two years, households have been squeezed between high prices and weak wage growth. With inflation now at a two-year low and growing upward momentum in pay packets, consumers are likely to feel less of a pinch on their wallets.

"This easing in the cost of living should provide some uplift for the High Street just as consumer confidence appears to be waning," Mr Parikh said.

This is good news for consumers, Stephen Clarke, senior economic analyst at the Resolution Foundation thinktank, said: "we are likely to see real wage growth of around 1.5%, the fastest since mid-2016."

"This cannot come too soon for households, with average earnings yet to be restored to their pre-crisis levels."

Amidst the uncertainty of Brexit, the economy is showing positive signs which can only be good for us all.

Of course to understand the impact of changes in your household income on your finances, and to protect yourself from the impact of inflation in the future, why not give us a ring.