FIGURES released from the Alliance & Leicester car price index. produced in association with What Car?, show that prices for new cars in the UK are continuing to remain steady. Prices in August were 5.6 per cent down from a year ago, compared with 6.8 per cent in July.

Prices for nearly new cars (one year old) and used cars (three years old) climbed year-on-year by 3.4 per cent and 6.7 per cent respectively. This compares with year-on-year rises of 10.3 per cent and 12.9 per cent respectively in July.

The Alliance & Leicester car price index shows that in real terms the price of new cars year-on-year rose slightly to -5.6 per cent in August compared with -6.8 per cent in July. Family and compact executive cars were priced the same as a year ago, with superminis demonstrating a 1.1 per cent rise.

Andy Bayes of Alliance & Leicester, said: "Although many new cars are priced lower than a year ago, prices in the most popular categories are really stabilising with family cars and compact executives costing the same as 12 months ago. It appears that we are now beginning to see the end of new car bargains."

Douglas McWilliams, of the Centre for Economics and Business Research, said: "Private spending on cars has been strong in August in line with the generally buoyant trend in consumer spending. So it is good news that new car prices remain weak in contrast with other inflationary indicators which edged up in the month."