Partly Cloudy

Partly Cloudy

max temp: 20°C

min temp: 17°C

ESTD 1874 Search

UK: Inflation unchanged at 2.7% despite energy price rises

11:12 15 January 2013

The CPI rate of inflation remained unchanged in December, the Office for National Statistics said today

The CPI rate of inflation remained unchanged in December, the Office for National Statistics said today

WINTER energy price increases helped keep the annual rate of inflation at 2.7% for the third month in a row, official figures showed today.

shares

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) was unchanged in December, although some economists predict it could rise to above 3% by the summer.

Price increases from four of the “big six” energy suppliers came into effect last month, dampening the impact of a fall in fuel costs.

Housing and household costs, which includes gas and electricity, rose 2% between November and December.

But the rate of transport cost increases declined, with petrol prices falling by 2.8p per litre between November and December, compared with a fall of 1.1p a year earlier. Diesel prices fell by 1.4p per litre, compared with a year ago, the ONS said.

Today’s figures also show the rate of the Retail Prices Index (RPI), which includes housing costs, rose to 3.1%, up from 3% last month. It was also pushed up by rising fuel bills.

Experts do not believe inflation will stay at 2.7% for long, with food inflation set to increase over the coming months after poor UK harvests due to last year’s severe wet weather.

However, there was some encouragement from the first drop in the rate of core inflation since July.

Vicky Redwood, chief UK economist at Capital Economics, said: “In other words, sluggish consumer demand seems to have prompted retailers to discount a bit more heavily than last year over the festive period.”

However, she predicted CPI will probably stay relatively high for most of this year, prompting households’ pay in real terms to fall again in 2013. This will be followed by inflation falling back below its 2% target towards the end of the year as the food and energy effects fade.

A Treasury spokeswoman pointed out that inflation was nearly half of its 5.2% peak and that the Government had taken more action to help households with the cost of living, including a further increase in the tax-free personal allowance and cancelling the fuel duty increase that was planned for this month.

Above-target inflation is proving a headache for Bank of England policymakers as they weigh up mounting signs of economic gloom against faster increases in the cost of living.

The economy is looking likely to have suffered a fresh contraction in the fourth quarter, according to some estimates, and could be heading for an unprecedented triple-dip recession.

But the Bank may be reluctant to push the button for more quantitative easing (QE), given the outlook for inflation.

shares

0 comments

Post Office

The branch on High Street will be shut for two weeks and is set for longer opening hours after works.

Mark and Spencer has posted a drop in quarterly clothing sales, after a colder May impacted demand for its spring and summer collections.

High street giant Marks & Spencer today posted a drop in quarterly clothing sales, after a colder May impacted demand for its spring and summer collections.

015 Flippie 1

A social media start-up which aims to rival the likes of Facebook and LinkedIn says it has won a significant investment ahead of its autumn launch.

Stephen Rose, SSE head of offshore wind generation

The man tasked with ensuring the smooth operation of a £1.6bn windfarm off the Suffolk coast has explained the challenges of overseeing 140 turbines capable of powering half-a-million homes and the contractual “crossroads” his firm faces next year.

Students at UCS in Interior Architecture and Design, have been taking part in a design competition to design an entrance canopy for the St Edmunds House apartments in Rope Walk.
Ross Carroll, director of Crown House Homes, left, with course tutor Dr Liana Psarologaki, and Annali Hubbard of Palmer & Partners estate agents, and some of the course students, Elliott Jones, Bryony Briggs, Dan Hutton, Amy Schuller and Michelle Villar

Apartment developers hold a design competition with university students

A member of staff at N2S bagging up scrap computer components ready for further destruction and recycling.

A Suffolk-based computer equipment lifecycle management company is celebrating after achieving accreditation allowing it to work at the highest level of Government.

From left, John Nicholson,  Andy Bloomfield  and Chris Pont of IJYI.

Ipswich-based software development firm IJYI has taken on its second apprentice in the space of six months.

Culture Secretary John Whittingdale, left, visiting Ipswich company IJYI.

Culture Secretary John Whittingdale has urged more small and medium-sized businesses in and around Ipswich to sign up to a scheme which provides the funding for the infrastructure they need to get fast broadband connections.

Post Office

The Post Office in a Suffolk town is moving to new premises, and will offer longer opening hours.

Dame Fiona Kendrick:, chief executive of Nestlé  UK & Ireland

Food giant Nestlé has announced plans to close its defined benefit pension scheme, sparking the threat of industrial action.

Most read

Most commented

Topic pages