Overcast

Overcast

max temp: 17°C

min temp: 12°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's target rate in more than four years.

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

Wolseley is to axe around 800 jobs.
Photo: Anna Gowthorpe/PA

Plumb Center owner Wolseley is set to axe up to 800 jobs as part of a restructuring that will see it shut 80 branches and a distribution centre.

Big Wave PR and Remembrance Travel receiving their gold award at the  Anglia, Thames and Chiltern PRide Awards.

PR professionals from Essex and Suffolk have been celebrating a string of successes in the Anglia, Thames and Chiltern regional round of the Chartered Institute of Public Relations’ annual PRide Awards.

Suffolk Business Ambassadors on their tour of the Port of Ipswich.

A group of Suffolk business leaders who have accepted the challenge of encouraging more inward investement in the county have been given a behind-the-scenes tour of the Port of Ipswich.

The 2015 Menta Trade Fair at The Apex in Bury St Edmunds.

With just a few days until the Menta Trade Fair on Tuesday, October 4, plans are being finalised for the biggest business event yet seen in Bury St Edmunds.

Earl Soham. Credit: Mike Page.

Owners of an east Suffolk business centre are looking to convert some of its older buildings into residential use – while finding new sites for those being displaced.

HOT JOBS

Show Job Lists

Most read

Most commented

Topic pages

Streetlife

Newsletter Sign Up

Sign up to the following newsletters:

MyDate24 MyPhotos24