UK CPI falls to 3.6% – still way above the government mandated target of 2%
UK CPI inflation falls to 3.6% – still some 80% higher than the government mandated target of 2%. This fall is being met with the expected calls that inflation is now under control in the UK – whilst we fully expect the next few months to keep seeing falling CPI inflation data, with the BoE putting the pedal to the metal on the money printing front the rebound in UK inflation will no doubt take everyone ‘by surprise’.
From the release:
A factor from last year – the increase in the standard rate of Value Added Tax in January 2011 to 20 per cent from 17.5 per cent – is a significant contributor to the falls in CPI and RPI annual inflation between December 2011 and January 2012. This rise in taxation led to upward pressures on prices between December 2010 and January 2011 (it was estimated to have added 0.76 percentage points to the CPI 1-month change in January 2011), there were, however, no such pressures on prices between December and January this year. This matters as the changes in CPI and RPI annual inflation are calculated by comparing the price changes between the latest two months and the same two months a year ago
CPI annual inflation stands at 3.6 per cent in January 2012, down from 4.2 per cent in December 2011. This decrease of 0.6 percentage points in annual inflation follows a fall of 0.6 percentage points between November and December 2011. The only time there has been a larger fall than 1.2 percentage points in annual inflation over a period of two consecutive months was between October and December 2008 when the rate fell by 1.4 percentage points. The CPI stands at 121.1 in January 2012 based on 2005 = 100
Office for National Statistics | 1Consumer Price Indices January 2012 | 14 February 2012
The largest downward pressures to the change in CPI annual inflation between December and January came from fuels & lubricants, products bought in restaurants & cafes, tobacco, vehicle maintenance & repair, the purchase of new vehicles and alcoholic beverages
The largest upward pressures to the change in CPI annual inflation between December and January came from financial services, clothing & footwear, air transport and recording mediaRPI annual inflation stands at 3.9 per cent in January 2012, down from 4.8 per cent in December 2011 and the lowest it has been since February 2010 when it stood at 3.7 per cent. The largest downward pressures to the change in RPI annual inflation between December 2011 and January 2012 came from motoring expenditure, alcoholic drinks, food and tobacco. There were no large upward pressures. The RPI stands at 238.0 in January 2012 based on January 1987 = 100
We saw a monthly fall of -0.5% in the CPI in January – however even if inflation stays at 0% each and every month it would take until the start 2013 to get back to where we should’ve been all along.
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- The deliberate policy of high inflation roars on as the CPI comes in at 4.8%
- UK Inflation – Is there a point to the Government’s inflation target?
- CPI inflation back to 4.5% – 21 months of BoE ‘fail’
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