Inflation in Surprise Fall but Prices Still Rising Sharply

Discussion in 'Economics' started by bearice, Jul 24, 2011.

  1. Pressure on the Bank of England to raise interest rates eased today as inflation showed an unexpected fall in June.

    However, prices are still increasing sharply, it's just that the rate of the rises has fallen.

    The Retail Price Index (RPI) fell from an annual rate of 5.2% in May to 5%, the Office of National Statistics (ONS) says.

    The Consumer Prices Index, the Government's official measure, but which does not include housing costs, fell to an annual rate of 4.2% in June against consensus City forecasts of no change from May's figure of 4.5%.

    The lower inflation number will be a relief for the Bank of England, which has been under pressure to raise interest rates to control rising prices, even though recent signs have suggested the economic recovery is stalling.

    The Bank has argued there is little sign of an inflationary spiral in the UK but, despite this surprise fall, it is the 19th month in a row that CPI inflation has exceeded the Bank of England's target of 2%.

    Month-on-month, the CPI fell by 0.1 of a percentage point, the first fall in prices between May and June since 2003.
  2. 18% Price Hike for Gas. 16% Hike for Electricity.

    British Gas will hike gas prices by an average 18% and electricity 16% from 18 August in a blow to 9 million households, it announced today.

    The energy giant is the second of the big six to increase prices after Scottish Power announced last month it will hike gas prices by 19% and electricity by 10% from 1 August. It's likely the remaining four big suppliers will follow shortly.