Inflation drops to a near three-year low

Inflation fell to its lowest level in almost three years today with easing pressure on household budgets being linked to the 0.3% drop from August.

While the 2.2% figure remains above the Government’s 2% target, the data from the Office for National Statistics will make welcome reading for economists and bears out what was claimed in a new survey yesterday by Ernst & Young so far as easing on household budgets was concerned.

However, there is concern regarding just how long the rate may stay this low with the increase in utility prices over the next few months likely to heap pressure back on the figures.

The ONS said today’s figure was the lowest rate since November 2009, when it stood at 1.9%.

The ONS said the majority of the downward pressure to the change in the CPI came from the housing & household services sector with September 2011’s utility bill rises falling out of the index calculation.

“There were significant upward pressures from the transport (predominantly motor fuels), recreation & culture and miscellaneous goods & services sectors,” it said.

The Retail Prices Index (RPI) annual inflation stands at 2.6% for September 2012, down from 2.9% cent in August.

The fact utility bill rises have now fallen out of the index calculation has been cited as the major reason for the fall. The majority of the upward pressure to the index came from an increase in the price of motor fuels.

Source : Duncan Tift – TheBusinessDesk.com
www.thebusinessdesk.com/westmidlands/news/384489-breaking-news-inflation-falls-to-a-near-three-year-low.html