Fuel prices push up inflation

Author: By Russell Lynch, Press Association

The Consumer Prices Index rose to 1.5 per cent last month from 1.1 per cent in
September, the Office for National Statistics (ONS) said.

While average petrol prices slipped 0.8p a litre over the month, it was a much
smaller fall than the 7.1p slide seen a year earlier amid collapsing oil
prices – adding to inflationary pressure.

Although CPI is still below the Bank of England’s 2 per cent target, today’s
figure is slightly above the 1.4 per cent expected by the City.

However, the Bank expects inflation to rise still further above the target in
the months ahead, particularly when the temporary cut in VAT is reversed in

Other reasons behind the jump in the CPI over the month included a record rise
in the price of second-hand cars due to a shortage of supply, and increasing
air fares compared with slashed prices a year earlier.

DVDs and computer games also registered price hikes as well as telephone
bills, where increases in landline costs were higher than a year earlier.

The price pressures offset downward influences on the index, particularly from
lower bank overdraft charges and mortgage arrangement fees.

The Retail Prices Index, which includes house prices, rose from minus 1.4 per
cent to minus 0.8 per cent on the month – the biggest month-on-month rise in
more than 19 years.

The same factors influencing the CPI affected the RPI – with the added impact
that house prices are now rising compared with falls a year earlier.

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