Shock inflation rate rise

Link to the article: Channel 4

Last Modified: 24 Mar 2009
By: Bridgid Nzekwu

The Bank of England governor is forced to write to the chancellor explaining why inflation is still higher than the government's target, as Bridgid Nzekwu reports.

The consumer prices index unexpectedly rose from 3 per cent in January to 3.2 per cent last month.

Meanwhile, it is almost half a century since inflation, as measured by the retail prices index, has been so low.

RPI, which includes housing costs, fell to zero in February, just a fraction lower than the previous month.



What went up and what went down?

The ONS reports that the largest pressure resulting in the increase on the CPI annual rate was the cost of food and non-alcoholic drinks, particularly an increase in the price of vegetables.

There was also a smaller increase in the cost fruit, mineral water, soft drink and juices, breads, cereals and meat. In contrast, the cost of coffee, tea and cocoa fell.

The cost of recreational and cultural activities also rose, mainly as a result of games toys and hobbies. Computer games and preschool activity toys were particularly affected.

Transport costs also rose, mainly due to the price of fuels and lubricants which rose by more than a year ago.