Monday 27 March 2017

UK inflation unchanged at 3.1pc

There was an overall fall of 0.8pc in UK petrol prices, compared with a 2.3pc hike a year ago. Photo: Bloomberg News
There was an overall fall of 0.8pc in UK petrol prices, compared with a 2.3pc hike a year ago. Photo: Bloomberg News

More expensive clothing offset falling air fares and petrol prices to keep the cost of living well above the Bank of England's 2pc target today.

The Consumer Prices Index (CPI) remained unchanged at 3.1pc in September, the Office for National Statistics (ONS) said, driven by furniture prices and food bills.

The stubbornly high rate of inflation - which has stayed at 3.1pc since July and was last lower at 3pc in February - will apply further pressure on policymakers at the Bank as they decide whether to keep interest rates at 0.5pc.

But pensioners are set for a boost after today's figures showed Retail Prices Index (RPI) inflation - the measure currently used to calculate the state pension - at 4.6pc last month.

This will come as a relief after last year's blow, when RPI fell into negative territory, which meant pension payments rose by only the minimum amount set - 2.5pc.

Food prices are expected to continue to rise and this, coupled with the pending hike in VAT to 20pc in January, means the pressure on the cost of living is not set to ease.

The sticky rate of inflation is likely to add weight to the argument to lift interest rates - a move backed by Monetary Policy Committee member Andrew Sentance, who has been alone in voting for an increase in rates to 0.75pc.

Consumers paid more for their clothing and footwear in September, where prices rose 6.4pc - the largest increase between August and September on record.

The hike was driven by women's outerwear - such as winter coats - where prices rose with the new autumn season, the ONS said.

UK supermarket shoppers paid more for their meat and fruit in September, which lifted the overall cost of food bills, which increased by 0.1pc.

But the ONS said this compared with a drop in prices a year ago, when supermarkets were rolling out sales across a range of products.

The ONS said bread and cereal prices did not show any significant movement - which suggests the impact of the droughts in Russia, and the country's subsequent ban on grain exports, was yet to filter through to British prices.

Air passengers paid less for fares in September, which fell by 27.8pc between August and September - compared with a 23pc drop a year ago. The largest effects came from long-haul flights, the ONS said.

An overall fall of 0.8pc in petrol prices, compared with a 2.3pc hike a year ago, reflected a fall of 1.1p per litre in the price of petrol this year, the ONS said.

Press Association

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