Tuesday, December 15, 2009
Inflation moves close to target
Posted by David Smith at 11:30 AM
Category: Thoughts and responses

Consumer price inflation rose from 1.5% to 1.9% last month, a little more than expected, largely because petrol prices rose a little this year but fell sharply a year ago. The rise in the consumer prices index between October and November, 0.3%, was modest. RPI inflation went from minus 0.8% to plus 0.3%, while RPIX inflation went up from 1.9% to 2.7%, just above its old 2.5% target. More details here.

Inflation will rise further in December, to around 2.5%, and will be hard to keep below 3% in January, unless price reductions are big enough to compensate for the rise in VAT back to 17.5%.