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Chart of the day: Inflation drops further

The UK’s rating on the all-items consumer prices index (CPI), which measures changes in the prices of consumer goods and services, reached 122.8 points in May 2012 (based on 2005=100), a decrease of 0.1 per cent compared to 122.9 in April, according to figures released by the Office for National Statistics (ONS) today.

The annual rate for CPI is 2.8 per cent, down from 3 per cent last month.

The largest downward pressures came from food and non-alcoholic beverages and motor fuels, while the largest downward pressures came from food and non-alcoholic beverages and motor fuels.

The all-items retail prices index (RPI), which measures the change in the cost of a basket of retail goods and services, reached 242.4 in May (based on January 1987=100), down from 242.5 previous month.

RPI annual inflation stands at 3.1 per cent in May, down from 3.5 per cent in April.

The largest downward pressures to the change in RPI annual inflation between April and May came from petrol & oil and food. Partially offsetting these was an upward pressure from other travel costs which includes air transport.

The larger fall in the annual RPI rate than the annual CPI rate is mainly due to the upward effect from air transport and sea transport, while the downward effect came from car insurance and rounding.

According to the ONS, in the 12 months to April 2012 there was relatively little growth in house prices in the UK, with the index increasing by 1.4 per cent over the period.

Annual house price increases in England were driven by a 4.9 per cent rise in London, and increases in the South East and South West of 2.1 and 1.6 per cent respectively. On a seasonally adjusted basis, house prices in the UK increased by 1.1 per cent between March and April 2012.