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Inflation falls to 2.2%

16 October 2012

11:02 AM

16 October 2012

11:02 AM

Inflation in the year (on the Consumer Prices Index) to September was 2.2 per cent, down from 2.5 per cent in August. On the Retail Prices Index, it was 2.6 per cent in September, down from 2.9 per cent.

This puts inflation at its lowest level since the end of 2009, and close to the Bank of England’s target of 2 per cent for CPI inflation. It continues the downwards trend since CPI inflation peaked at 5.2 per cent last September, although that included January 2011’s VAT rise from 17.5 per cent to 20 per cent. Stripping that (and the effects of other indirect taxes) out still reveals a marked decline in the rate of inflation, though, from 3.7 per cent last year to 2.1 per cent now.

The main reason for this month’s 0.3-point drop in the inflation rate is actually something that happened in September last year: a rise in utility bills that saw electricity costs rise by 7.5 per cent and gas by 13 per cent. Last month’s figures were comparing prices before that rise (August 2011) with prices after it (August 2012), whereas this month’s figures compare only prices after it (September 2011 and September 2012).


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