Inflation Drops in October

The rate of Consumer Prices Index (CPI) inflation in the UK fell slightly to 5% last month, dropping from of 5.2% in September.

Falls in the price of fuel, food and air transport all contributed in driving the inflation rate lower.

Despite the drop, the rate still remains well above the Bank of England's target of 2%.

Retail Prices Index (RPI) inflation, which includes mortgage interest payments, made a similar drop from 5.6% to 5.4%.

Despite the fall, the government said it recognised that inflation remained high.

A Treasury spokesperson said, "These are difficult times for households as prices continue to be affected by conditions in the global oil and gas markets."

Food prices were driven down by heavy supermarket discounting and good harvests, according to the Office for National Statistics.

Air fares, which are historically very changeable, fell by 6% compared to the previous month.

Petrol also fell by 0.5p a litre, reflecting falls in the price of crude oil due to the weakening global economy.

Upward pressure on prices came from increases in the cost of clothing, electricity and gas.

Price rises from all the major energy suppliers have increased domestic fuel bills and are also expected to push up November's inflation figures.

The prolonged period of high inflation has made it difficult for savers to keep up with rising prices.

According to the Moneyfacts financial information service, there is no standard savings account currently available which would allow people to ensure their savings keep up with inflation, after tax is taken into account.

"Over the last year, the number of savings accounts that beat inflation for basic-rate taxpayers has dropped successively from 91 to absolutely none, which leaves savers in an impossible position," said Sylvia Waycot from Moneyfacts.

Posted at 04:07PM Nov 15, 2011 by Marc Stenton in The Economy  |  Comments[0]