Chart of the Day: Inflation falls

CPI and RPI both drop by 0.2 points

Thanks largely to lower water, gas and electricity bills, inflation in the UK continued to fall in February, according to new figures released by the Office for National Statistics (ONS).

The consumer price index (CPI) - a measure used to gauge inflation rates across the European Union - dipped in the UK to 3.4 per cent last month, a decrease from 3.6 per cent in January. The Bank of England's target for inflation is 2 per cent on the CPI measure.

A large upward effect came from food and non-alcoholic beverages, clothing and footwear, furniture and household equipment.

The CPI stands at 121.8 in February 2012 (based on 2005=100).

The retail price index in the UK was 3.7 per cent in February, a decrease of 3.9 per cent. This was mainly due to downward pressures from fuel and light and motoring expenditure, while upward pressure came from alcoholic drinks.

The all-goods index is 189.9 in February, up from 186.7 the previous month. The RPI stood at 239.9 in February (based on January 1987=100).

David Page, an economist at Lloyds told the Financial Times:

We are no longer especially confident that inflation will slow back to, never mind below, the Bank of England Monetary Policy Committee’s 2 per cent target over the medium term.

Sylvia Waycot of the financial information service Moneyfacts told the BBC:

It's just a bit too early for everyone to burst into a chorus of 'Don't worry, be happy', as today's figures still mean that there are only 79 accounts out of 1,126 that negate both inflation and the taxman’s cut.

 

Photo: Getty
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Cabinet audit: what does the appointment of Liam Fox as International Trade Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for International Trade.

Only Nixon, it is said, could have gone to China. Only a politician with the impeccable Commie-bashing credentials of the 37th President had the political capital necessary to strike a deal with the People’s Republic of China.

Theresa May’s great hope is that only Liam Fox, the newly-installed Secretary of State for International Trade, has the Euro-bashing credentials to break the news to the Brexiteers that a deal between a post-Leave United Kingdom and China might be somewhat harder to negotiate than Vote Leave suggested.

The biggest item on the agenda: striking a deal that allows Britain to stay in the single market. Elsewhere, Fox should use his political capital with the Conservative right to wait longer to sign deals than a Remainer would have to, to avoid the United Kingdom being caught in a series of bad deals. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.