Price Rise in Food and Clothes Blamed for Inflation Increase

Link to the article: Channel 4 News

A record surge in food and clothing costs has driven up inflation for November, as Gary Gibbon writes that parts of the government are still looking at the potential for a "double-dip" recession.


The Consumer Prices Index (CPI) went up to 3.3 per cent last month, from 3.2 per cent in October, according to the Office for National Statistics (ONS).

The increase was driven by a 1.6 per cent rise in the cost of food and non-alcoholic drinks and a 2 per cent increase in clothing and footwear costs, which are the highest increases for both sectors in an October to November period since records began. The price of furniture and household equipment also rose.

Inflation down – but by less than forecast

Link to the article: Channel 4 News

By Krishnan Guru-Murthy

Economists were expecting to see a sharp fall in inflation today, but that did not happen.

Economists were expecting to see a sharp fall in inflation today, but that didn't happen.

The headline rate of Retail Prices Index (RPI) inflation, which includes mortgage interest payments, rose to minus 1.1 per cent in May from minus 1.2 per cent in April, according to the Office for National Statistics - that's partly because of a surprise increase in house prices.

The consumer prices index - which doesn't include housing - rose 2.2 per cent, that's 0.1 per cent below last month's figure.

The figures showed food prices rising by less than a year ago in May, while electricity bills fell this year compared with unchanged prices 12 months earlier. But this was offset by price hikes for alcohol and tobacco over the month following.

And the weaker pound is also pushing up import prices, with DVDs and television prices rising this year compared with falling prices a year ago, ONS statisticians indicated.

The CPI measure has now been above target for 20 months, although, according to the Bank of England's forecasts, it is set to fall to 1 per cent or lower later this year as the recession bears down on prices.

Does this mean inflation is more persistent than we thought?

Krishnan Guru-Murthy talks to Karen Ward, a UK Economist at HSBC.