UK inflation fell in December, for the third month in succession, and is now only the third highest in the EU. However it continues to be high by the standards of the past 20 years and is still rising at double the rate of pay increases. The figures for the year to December 2011 (with year to end November figures in brackets) are as follows:
Retail Prices Index (RPI) – 4.8% (5.2%)
RPI excluding mortgage interest (RPIX) – 5.0% (5.3%)
Consumer Prices Index (CPI) – 4.2% (4.8%)
The falls in all the main indices were the result of heavy discounting on the high street during the period around Christmas and falls in prices of food, fuel, clothing and recreation/leisure.
Despite this, there were still some steep price hikes. The CPI figures, for example, showed big year-on-year increases in the prices of oils and fats (13%), coffee, tea and cocoa (9.6%), tobacco (11.8%), electricity (14.1%), gas (19.8%) and house contents insurance (21%). The RPI figures showed many equally high increases, including in the prices of beef (10.6%), lamb (17.5%), oils and fats (14.4%), coffee and hot drinks (12.9%), tobacco (11.8%), electricity (14.1%), gas (19.6%) and vehicle tax and insurance (18.6%).
Overall UK inflation may have fallen in December but it is still high by international standards. In the EU, our 4.2% CPI rate is below the rate in Slovakia (4.6%) and Poland (4.5%) but is well above rates in Germany (2.3%), Spain (2.4%), France (2.7%), the Euro Area (2.7%), the EU as a whole (3.0%) and Italy (3.7%). UK inflation is also higher than in Switzerland (-0.4%), Japan (-0.2%), the USA (3.0%) and China (4.1%).
Further falls in UK inflation are expected over coming months as reductions in utility prices kick in and the effect of last year’s VAT increase drops out of the annual comparisons.
*The latest Inflation figures are (RPI 3.9%, CPI 3.6%)
Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.