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UK inflation rises to 4.5 per cent

Figures show that Consumer Prices Index (CPI) inflation has risen from 4.4 per cent in July to 4.5 p

The UK government's targeted rate of Consumer Prices Index (CPI) inflation rose by 0.1 per cent in August from 4.4 per cent in July. The Retail Prices Index (RPI) measure also increased from 5 per cent to 5.2 per cent.

The Bank of England argues that the rate of inflation is above the target set by the government, largely due to the rise in VAT to 20 per cent at the start of this year, and past increases in global energy prices. The Bank's target rate for CPI is 2 per cent and it expects inflation to return to target in the next two years.

The Office for National Statistics (ONS) has attributed the rise in inflation to be a result of higher prices for clothing, footwear, petrol and also an increase in heating costs. It said that there had been a record 3.7 per cent monthly increase in prices for clothing and footwear between July and August.

Many analysts believe that the rate of CPI will continue to rise, possibly reaching a peak of 5 per cent, before coming down towards the end of this year or at the beginning of next year. Chris Williamson, chief economist at Markit, predicts that inflation will continue to rise as "utility bills continue to increase, putting further pressure on already-strained household budgets."

However, he believes that it will begin to fall by the end of the year and drop significantly at the start of next year "as those factors which have driven the rate up this year, such as January's hike in VAT from 17.5 per cent to 20 per cent, high oil and food prices and the depreciation of sterling all move into reverse."

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Geoffrey Howe dies, aged 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.