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16/01/2007
UK inflation rises to 3%
UK inflation increased to 3% in December, according to the latest official figures.
The Consumer Prices Index - the government's target measure - increased from 2.7% in November to reach 3% in December, the Office of National Statistics reported. The figure is the highest on record, well above the government's target of 2%.
The ONS said that the largest upward effect on the CPI annual rate came from transport costs. Prices of fuels and lubricants rose this year, largely reflecting the increase in fuel duty, which came into effect on December 6.
The average price of petrol increased by 2p per litre between November and December this year, compared with a fall of 3p a year ago.
Another large upward contribution came from furniture and household goods. Prices of furniture showed their largest month-on-month increase since the start of the official series in January 1997 as retailers raised their prices across a broad range of items prior to the usual January sales period.
A further large upward effect came from recreation and culture, mainly due to changes in the price of computer games, non-fiction books and DVDs.
Large downward contributions came from changes in the price of vegetables and from clothing and footwear, with prices of women's outerwear falling by more than a year ago due to widespread special offers, particularly on jackets, dresses and trousers.
Retail price inflation rose to 4.4% in December, the highest since December 1991, and up from 3.9% in November. Housing costs excluded from the CPI had a large upward effect on the RPI this month, mainly due to the mortgage interest payments component, with lenders passing on the November 2006 quarter point increase in the Bank rate.
RPIX inflation, which excludes mortgage interest payments, was 3.8% in December, an increase from 3.4% in November.
Analysts are now suggesting that the Bank of England could introduce further interest rate rises. Interest rates were increased to 5% last week.
James Knightley, an economist at ING Bank, said: "Given evidence suggesting that wage rises are picking up, there remains the real risk that the Bank of England will hike rates again. We would expect any move to come in the next two months."
(KMcA)
The Consumer Prices Index - the government's target measure - increased from 2.7% in November to reach 3% in December, the Office of National Statistics reported. The figure is the highest on record, well above the government's target of 2%.
The ONS said that the largest upward effect on the CPI annual rate came from transport costs. Prices of fuels and lubricants rose this year, largely reflecting the increase in fuel duty, which came into effect on December 6.
The average price of petrol increased by 2p per litre between November and December this year, compared with a fall of 3p a year ago.
Another large upward contribution came from furniture and household goods. Prices of furniture showed their largest month-on-month increase since the start of the official series in January 1997 as retailers raised their prices across a broad range of items prior to the usual January sales period.
A further large upward effect came from recreation and culture, mainly due to changes in the price of computer games, non-fiction books and DVDs.
Large downward contributions came from changes in the price of vegetables and from clothing and footwear, with prices of women's outerwear falling by more than a year ago due to widespread special offers, particularly on jackets, dresses and trousers.
Retail price inflation rose to 4.4% in December, the highest since December 1991, and up from 3.9% in November. Housing costs excluded from the CPI had a large upward effect on the RPI this month, mainly due to the mortgage interest payments component, with lenders passing on the November 2006 quarter point increase in the Bank rate.
RPIX inflation, which excludes mortgage interest payments, was 3.8% in December, an increase from 3.4% in November.
Analysts are now suggesting that the Bank of England could introduce further interest rate rises. Interest rates were increased to 5% last week.
James Knightley, an economist at ING Bank, said: "Given evidence suggesting that wage rises are picking up, there remains the real risk that the Bank of England will hike rates again. We would expect any move to come in the next two months."
(KMcA)
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