There was a further fall in inflation in February, the latest month for which figures are available, but prices are still rising faster than wages and than in competitor economies.
The figures for the year to end February 2012 (with end January figures in brackets) are as follows:
Retail Prices Index (RPI) – 3.7% (3.9%)
RPI excluding mortgage interest (RPIX) – 3.8% (4.0%)
Consumer Prices Index (CPI) – 3.4% (3.6%)
The main downward pressure on the RPI came from price rises in motoring expenditure and fuel and light, while the main downward pressure on the CPI came from domestic electricity and gas, recreation, transport and electrical goods.
Nonetheless there were still upward pressures on both the main indices. For the RPI these included: alcohol and tobacco (6.1%), beef (11.6%), lamb (13.2%), pork (9.1%), butter (10.3%), coffee and beverages (13.7%), electricity (10.1%), gas (17.5%) and vehicle tax and insurance (10.9%). Upward pressure on the CPI included increased costs of fuels and lubricants (5.3%), education (5.1%), jewellery, clocks and watches (8.6%) and transport insurance (11.6%).
UK inflation, as measured by the CPI, is now only the seventh highest in the EU but is above the EU average of 3% and the Eurozone average of 2.7%. It is equal to the inflation rate in Italy but is higher than in France and Germany (2.5%), Spain (1.9%), Greece (1.7%) and Sweden (1%). The UK rate is also higher than that in China (3.2%), the US (2.9%), Switzerland (-1.2%) and Japan (0.5%).
Predictions are that inflation will fall further over coming months but these are likely to be affected by the current record high prices for oil, anticipated higher prices for food, and the increase in the price of postage stamps (by 14p to 60p for first class and by 14p to 50p for second class).
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.