Tuesday, October 16, 2012
Inflation within sight of target - for now
Posted by David Smith at 09:40 AM
Category: Thoughts and responses

The drop in inflation to 2.2% in September, from 2.5% in August, is welcome in its own right, by easing the squeeze on real incomes. It is also good news for the government, being the monthly number used for next spring's benefit uprating. The Treasury has already been hinting at not uprating benefits by the full amount of indexation. This number may mean the political flak is not worth it. Retail price inflation fell from 2.9% to 2.6%.

The shape of things to come is hinted at by the producer prices index, which showed that factory gate prices rose by 2.5% in the 12 months to September, up from 2.3% the previous month. Input prices, however, fell by 1.2% in the 12 months to September.

In a busy day for news on prices, the Office for National Statistics said house prices rose by 1.8% in the 12 months to August.