UK inflation falls to 5%

The consumer price index annual rate of UK inflation dropped from 5.2% in September to 5% in October 2011.

The consumer price index (CPI) annual rate of UK inflation dropped from 5.2% in September to 5% in October.

The latest figures from the Office for National Statistics (ONS) revealed a drop in both the CPI rate and the retail price index (RPI), which slipped to 5.4% in October from 5.6% in September. Despite this, the rate of inflation still remains above the Bank of England’s target of 2%, with the government recognising that inflation still remains high.

The drop has been attributed to a fall in food prices due to heavy discounting by supermarkets, a decrease in air transport fares and a slight fall in fuel prices.

Petrol fell by 0.5p a litre, mirroring a drop in the price of crude oil due to the weakening global economy. MPs are set to debate a motion later which urges the government to limit petrol price increases in light of their plans to increase fuel duty by 3p a litre in January.

Pressure on inflation rates, such as a rise in the prices of clothing and footwear and increases in gas and electricity bills from all major energy suppliers, are expected to push up November’s inflation figures.

The UK’s drawn out period of high inflation has made it difficult for savers to keep up with rising prices.  According to the Moneyfacts financial information service, there is no standard savings account currently available which would permit people to ensure their savings keep up with inflation after tax is taken into account.

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