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Slowest rate of UK inflation since November 2009

The Consumer Prices Index (CPI) annual inflation figure now stands at 2.2% for September, according to figures issued this morning by the Office for National Statistics. This is the lowest level for nearly three years when it reached 1.9% in November 2009.

UK inflation has fallen substantially over the past year

The reason for the decline in CPI was largely due to what didn’t happen. Twelve months ago there were some big rises in utility bills and these have now dropped out of the equation, although the recent announcements of gas and electricity price rises will have an impact further down the line. In fact, CPI in September 2011 stood at 5.2%, so there has been quite a dramatic reduction in the inflation rate since then, which is now very close to the 2% mid-point rate which the Bank of England has to aim at.

The 2.2% rate in September is particularly important because a number of benefits including income support and Jobseeker’s Allowance are based on the September figure, in order to determine changes in benefits next April.

The Retail Prices Index (RPI), which includes mortgage payments, was 2.6% in September compared to 2.9% in August. More significantly it had declined from 5.6% in September 2011.

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Posted in Bank of England, Consumer Price Index

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