Inflation stuck at 1.8 per cent
Inflation stuck at 1.8 per cent
Tuesday 18th August 2009
A key inflationary measure remained unchanged in July, official figures today revealed.Consumer prices index inflation was 1.8 per cent last month, as it was in June, the Office for National Statistics said.
The headline rate of inflation from the retail prices index, which includes mortgage interest payments, rose to -1.4 per cent from -1.6 per cent.
The freeze in inflation was unexpected, with analysts predicting another fall, despite the figure still lying 0.2 per cent below the government's two per cent target.
Strong inflationary pressures have been making the Bank of England's job to keep inflation stable difficult over the last 12 months.
Last year, high inflation was the problem, peaking at 5.2 per cent in September 2008. But as the Bank slashed the base rate in response the threat of deflation arose, as the rate of inflation quickly fell.
In the Bank's quarterly inflation report, the monetary policy committee (MPC) forecast a return to two per cent in two years, provided the policy of a low base rate and quantitative easing continues.
However, before returning to the target level, inflation is "more than likely" to fall below one per cent, the MPC added.
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