Unexpected fall in inflation
New figures from the Office of National Statistics show that inflation fell unexpectedly by 0.1 per cent in August.
The Consumer Prices Index (CPI), the Government’s preferred measure of inflation, fell to 1.3 per cent in August, down from 1.4 per cent in July.
The Government’s ceiling target for the CPI is 2.0 per cent.
Downwards pressure came from clothing, footwear, recreation and culture prices, which rose less than last year. A small amount of upward pressure came from furniture and household goods.
But the second measure of inflation, the Retail Price Index (RPI), which includes mortgage interest payments, was up to 3.2 per cent in August from 3.0 per cent in July. This was mainly due to a rise in mortgage payments due to a rise in the average size of mortgage.
In an international context, the UK’s inflation rate has been among the lowest in the Europe since 2000. Provisional EU figures for July show that average inflation stood at 2.2 per cent, compared to the UK’s 1.4 per cent.
