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September 13, 2005
Inflation ramps up in August
According to the Office for National Statistics (ONS), UK consumer price index (CPI) inflation increased to 2.4% in August from 2.3% in July, mainly due to the increased cost of petrol, which contributed approximately 0.08 percentage points. August’s figure is the highest CPI level since current records began eight years ago and is the second month running that inflation has been higher than the government’s 2% target.
Headline retail price inflation (RPI), which includes housing costs, decreased from 2.9% to 2.8% year-on-year, while the underlying rate of RPI fell to 2.3% from 2.4% in July.
Despite the increase in CPI, some analysts believe the Bank of England could still afford to cut interest rates from the current level of 4.5%, as the 'core' level of inflation - which gives the year-on-year figure - is 1.7%, down from 1.8% in July.
The reduction in the core rate of inflation is due to lower prices for products such as DVDs, CDs, theatre and live music tickets and package holidays.
While CPI was pushed up by petrol prices, other factors also had an upward impact, including the price of clothing and footwear. There was a small downward effect from housing, household services and furniture, where summer sales usually held in July were being delayed until August.
Posted by at September 13, 2005 08:25 PM
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