UK inflation rose to 1.9%, ONS figures show

Tuesday 15th December 2009

UK inflation picked up in November, with the consumer price index (CPI) rising from 1.5 per cent in October to 1.9 per cent.

The Office for National Statistics (ONS) said the rise was fuelled by petrol prices, and marked the highest rate since May.

The CPI, which is the government's target measure, was affected largely by transport, the ONS said this morning; with 'fuels and lubricants' up 2.8 per cent between October and November.

The ONS also said there were small upward pressures from clothing and footwear, with the main effects coming from men's and women's outerwear, and housing and household services, where the price of heating oil rose this year but fell a year ago, again reflecting movements in crude oil prices.

The largest downward pressure affecting the change in the CPI annual rate came from food and non-alcoholic beverages. Overall prices in this category rose by 0.6 per cent between October and November this year compared with 1.4 per cent a year ago.

In the year to November, retail price index (RPI) annual inflation was 0.3 per cent, compared with a fall of 0.8 per cent in October. The last time there was an increase in the annual inflation rate greater than 1.1 per cent was between March and April 1990, when the rate increased from 8.1 per cent to 9.4 per cent, the ONS said.

In November 2009, the main factors affecting the CPI also affected the RPI.

Today's inflation figures edged closer to the Bank of England’s two per cent target. Mark Bolsom, head of UK trading desk at Travelex, said: "We expect figures to continue climbing, as rising oil prices, a weaker pound and the reversal in VAT have caused inflationary pressure. We could very well see consumer price inflation hitting the three per cent mark early next year.

"As the world comes out of recession, demand for raw materials goes up, as do prices, which in turn has a knock on affect on inflation. Stronger oil prices have had an upward impact on inflation figures and we expect this to continue rising."

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in October, was above the provisional figure for the European Union. The UK rate was 1.5 per cent whereas the EU's as a whole was 0.5 per cent.

Inflation is forecast to rise further next year when the VAT discount ends, and the tax returns to 17.5 per cent.

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