Tuesday, October 18, 2016

UK Inflation rises to 1%

Figures released today by Office for National Statistics (ONS) show that the Consumer Price Index for the 12 months to September has risen to one percentage point compared with 0.6% in the year to August.

This is still only half of the government's inflation target, and although it is the highest figure for nearly two years it is low by recent historical standards

Clothing saw its biggest price rise since 2010 and fuel, which was falling a year ago, was also more expensive. However, the ONS said there was "no explicit evidence" that the 18% drop in the pound since June 23rd was a significant factor in the higher prices seen thus far. It is probable that this will eventually feed through into higher prices for imported goods, but that does not appear to have  happened yet.

The CBI, representing business, saying: "It's still too soon for sterling's recent depreciation to affect today's inflation figures, however we do expect it to push up prices through the course of next year, which will hit the pound in people's pockets."

Maternity and paternity pay, as well as some disability benefits, are set to rise, though, as they are some of the benefits linked to the September inflation figure.

The basic state pension is also likely to be raised by 2.5% from next April, taking it over £122 a week.

Since 2010, the government's "triple-lock" policy has meant state pensions rise by the inflation rate, average earnings or 2.5% - whichever is highest.

CPI inflation measures the price of a "shopping basket" of more than 700 items, from the cost of women's leggings to a multipack of fizzy drinks.The Retail Prices Index (RPI) measure of inflation, which includes mortgage interest payments, rose to 2.0% in September from 1.8% in August.

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