UK: Inflation hits three-year low but energy prices threaten to reverse trend

INFLATION fell to its lowest level for nearly three years last month, official figures showed today, but energy price hikes are expected to put household finances under pressure once more.

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) fell to 2.2% in September, down from 2.5% in August and the lowest level since November 2009.

However, while CPI is now less than half the 5.2% seen a year earlier, gas and electricity rises are expected to push it higher after four of the “big six” energy firms announced price rises.

The ONS said CPI fell last month when hefty energy price increases seen in 2011 dropped out of the index.

But with SSE, npower, British Gas and Scottish Power having announced moves to increase tariffs, CPI is expected to start rising once more after a year of falls.


You may also want to watch:


The ONS said the recent spate of energy bill increases would likely lead to similar increases in inflation as seen last year, when utility price increases added 0.45% to CPI.

Rising fuel prices also put upward pressure on CPI last month, when petrol rose by 3.9p a litre between August and September compared with a fall of 0.3p a year ago, according to the ONS.

Most Read

Experts fear rising food prices will also push inflation back up.

Today’s figures showed the Retail Prices Index (RPI), which includes housing costs, also eased back last month, to 2.6% from 2.9% in August.

Last month’s inflation fall will come as bad news for basic state pensioners and those on benefits, as the Government uses September’s CPI figure to calculate their payment increases the following April.

Become a Supporter

This newspaper has been a central part of community life for many years. Our industry faces testing times, which is why we're asking for your support. Every contribution will help us continue to produce local journalism that makes a measurable difference to our community.

Become a Supporter
Comments powered by Disqus