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News - 15 December 2011

UK inflation rate falls.

The rate of Consumer Prices Index (CPI) inflation in the UK fell to 4.8% during November, down from 5% the month before, according to the Office for National Statistics (ONS).

The fall was partly due to a slowdown in the rise in food and non-alcoholic drink prices.

Cereals and bread prices fell by 1% in the month, compared with a 1.9% increase a year ago.  Vegetable prices fell by 1% between October and November, their largest fall over this period for a decade. There was also a fall in the price of sugar, jam, chocolate and sweets.

However, the rate still remains well above the Bank of England's target of 2%.
Retail Prices Index (RPI) inflation - which includes mortgage interest payments - fell to 5.2% from 5.4%.

The Bank of England said earlier this year that it expected the rate of inflation to drop in 2012 as prices fall back and the impact of the government's increase in VAT is no longer felt.

The Bank believes weak economic growth will push inflation below the 2% mark over the next 18 months.

The Office of National Statistics (ONS) also said that prices of electricity, gas and other fuels rose at an annual rate of 20.9%, the fastest pace since February 2009. But conversely, the rate of increase in the cost of goods being produced by manufacturers was also easing.

Stuart Coleman, Manager of the Tax Department of ABDS says:

“The prolonged period of high inflation has made it difficult for savers to keep up with rising prices savers will need to find an account paying 6% for their savings to keep up with inflation.”

If you need any help and advice for your business or financial planning don’t hesitate, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

 

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