Tuesday, 13 October 2009

September's inflation numbers are out

CPI was 1.1% on the year, down from 1.6 last month.

RPI was -1.4%, down from -1.3 last month.

The significance is limited. The numbers are still being flattered by the halving of world oil prices eight months ago. Oil has since gone back up and is now around $72 per barrel. The reduced VAT rate is holding inflation down.

The temporary VAT reduction will be reversed at the end of the year and by February the oil price drop will have fallen off the back-end of the year-on-year statistics.

Meanwhile sterling is continuing to fall against the euro and other world currencies and this will make imported goods more expensive. Inflation is set to return to the UK economy.

BBC

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