Sunny

Sunny

max temp: 24°C

min temp: 14°C

ESTD 1874 Search

Economy: Surprise fall in inflation seeks CPI hit 2% target for first time in four years

10:22 14 January 2014

Inflation fell to 2.0% last month, the first time it has hit the Bank of England

Inflation fell to 2.0% last month, the first time it has hit the Bank of England's target rate in more than four years.

The rate of inflation fell to the Bank of England’s target of 2% for the first time in more than four years in December.

The rise in food prices eased to see the Consumer Prices Index (CPI) rate drop to its lowest level since November 2009, when it stood at 1.9%.

Today’s figure from the Office for National Statistics (ONS) beat expectations that there may be a small rise from November’s 2.1% figure, spurred by gas and electricity price hikes.

But while steep increases did have an upward impact, many of the tariff rises had not yet taken effect when the latest data was collected.

The sixth successive monthly drop in inflation eases pressure on the Bank of England, which would have to reconsider its flagship low interest rate policies should inflation look likely to spiral out of control.

The latest drop is a further decrease after inflation reached a four-year low last month. Inflation last met its 2% target, rather than hovering above or below it, in April 2006.

The latest figures showed the usual month-on-month rise in the cost of food and alcoholic beverages from November to December was the smallest it has been since 2006.

It meant the annual rate of inflation in the sector slowed to 1.9%, the lowest rate since May 2010, indicating an easing in the usual pressure on household Christmas budgets.

The main downward contributions to this came from fruit and meat, while the price of fish was lower in December compared with November. Meanwhile coffee, tea and cocoa were cheaper last month than they were the year before, though inflation for bread and cereals accelerated.

Games, toys and hobbies also saw price falls as Christmas approached, with reductions in computer games made for older platforms.

Rising petrol prices had an upward effect on inflation, but the increase in the rate of air fares was lower than in 2012.

A separate measure of inflation, the Retail Prices Index, rose to 2.7% from 2.6% in November. A new measure of inflation, CPIH, which includes housing costs, was unchanged at 1.9%. Another new measure, RPIJ, was also unchanged at 2%.

Search hundreds of local jobs at Jobs24

0 comments

Giffords Hall Vineyard feature. Including the use of drone technology to measure crop yield. Pictured is owner Linda Howard.

Vineyard owners in Suffolk and Essex say their industry has grown so quickly over recent years that the region may soon follow famous French appellations in seeking protected status for its wines.

European Union Competition Commissioner Margrethe Vestager speaking during a media conference at EU headquarters in Brussels.
Photo: AP Photo/Virginia Mayo

Technology giant Apple has vowed to overturn a record 13bn euro (£11.1bn) bill after a European Commission ruling that it has an illegal “sweetheart” tax deal in Ireland.

The newly rebranded Fenwick store, previously Williams & Griffin, in Colchester.

Colchester’s new-look Fenwick department store is to be officially unveiled on September 15 following a £35m redevelopment.

12-20 Upper Orwell Street, which could be demolished and regenerated if plans by the East of England Co-op go through

A derelict building in Upper Orwell Street which has been empty for decades could be set for demolition if new plans for the area are approved.

A Claydon hybrid drill in action.

Suffolk-based Claydon Drills, the European market leader in strip seeding technology, has appointed Thurlow Nunn Standen to handle sales and service of Claydon Hybrid drills, TerraStar cultivators and Cambridge Rolls in Suffolk and Norfolk and parts of north Essex and Cambridgeshire.

HOT JOBS

Show Job Lists

Most read

Most commented

Topic pages

Streetlife

Newsletter Sign Up

Sign up to the following newsletters:

MyDate24 MyPhotos24