The inflation rose at a lower than expected rate in September. Analysts had, however, expected it rise much more over fears of higher transport prices and petrol prices.
The (ONS) Office for National Statistics said that consumer prices rose 0.2 percent on the month as the annual rate grew to 2.5 percent from 2.4 percent in August. It is the highest rate since comparable records are available in 1997.
Though it had been above Bank of England’s 2 per cent target, it was lesser than the 2.7 per cent forecasted by analysts. The underlying rate of retail price inflation went up from 2.3% to 2.5%, but the headline rate - which includes mortgages - fell to 2.7% from 2.8%.
Petrol costs did jack up the price rise, but its effect was slightly nullified by footwear and clothing prices which fell considerably. A steep reduction in the air fares prices also restricted the increase in inflation.
According to the ONS, the average price for ultra-low sulphur petrol rose by 4.6 pence per litre in September as against a rise of around 0.1 pence a year ago.
Policymakers expect the inflation to go beyond target in the coming few months. The ONS said that costs of fuels and lubricants had contributed 0.14 % to the overall rise in CPI.
"Core inflation", which excludes energy costs and food, drink and tobacco, remained unchanged at 1.7%. Increasing recreation and culture costs also contributed to the growth in inflation. Prior to December 2003, the Bank of England used (RPI), which included the cost of mortgages and other housing costs, as the index for inflation.
Ross Walker, UK economist at RBS Financial Markets said: "Some of the concerns out there about CPI hitting 3% ... at least in the short term look overdone," Walker didn’t see inflation going up further unless there was a hike in oil prices.
Posted
on : Tue, 18 Oct 2005 12:10 GMT | General News
By : Rob Davis
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