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UK inflation slows for third consecutive month

Bank of England cites "temporary factors" for continued high inflation with 2 per cent target still

The Office of National Statistics has released July's inflation rate figures which show a further drop in UK inflation.With only a 0.1 per cent fall however, inflation is still markedly high.

Edging to 3.1 per cent from 3.2 per cent in June, high inflation rate figures have "surprised" Bank of England Governor Mervyn King. The Retail Prices Index (RPI) slowed to 4.8% from 5% in June, a sign of some positive movement in the UK economy.

In a letter to the Chancellor George Osborne, King explained that the reasons behind lofty inflation rates were "temporary" or short term, including the return of VAT to 17.5 per cent in January following the drop to 15 per cent in response to the recession, past rises in oil prices and higher import prices as a result of the depreciation in the pound since mid-2007. High food prices especially have been earmarked as a factor for the current inflation.

The Consumer Prices Index (CPI) is still well above the Bank of England's 2 per cent target rate, however King stated that he expects the inflation rate to fall below this target in 2012.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.