Stable Gas & Electricity Bills Bring Down CPI

CPI annual inflation - the Government's target measure - was 1.1% in September, down from 1.6% in August, today's consumer price indices from the Office for National Statistics show.

By far the largest downward pressure affecting the change in the CPI annual rate came from housing and household services. This was principally due to average gas and electricity bills, which were unchanged between August and September this year but rose a year ago when some of the major suppliers increased their tariffs.

There were further large downward pressures from:

• Food and non-alcoholic beverages, where prices fell overall by 0.9% between August and September this year compared with 0.3% a year ago. The largest effect came from meat, with average prices falling by 1.2% this year but rising by 0.8% a year ago. There was a small downward effect from fruit, particularly from bananas, and a small upward effect from mineral waters, soft drinks and juices.
• Restaurants and hotels, where prices were largely unchanged this year but rose a year ago. The downward effects came from restaurants and cafes, and from accommodation services where the price of hotel accommodation fell this year but rose a year ago.
• Recreation and culture, where the effect came mainly from recording media (particularly pre-recorded DVDs) and, to a lesser extent, from games, toys and hobbies. Partially offsetting these effects were small upward pressures from photographic equipment where prices of digital cameras rose this year but fell a year ago, and from books where prices of non-fiction hardback books rose this year but were little changed a year ago.

The largest upward pressure affecting the change in the CPI annual rate came from transport, in particular from fuels and lubricants and second-hand cars where prices rose between August and September this year but fell a year ago. The average price of petrol rose by 2.4 pence per litre this year to stand at 106.2 pence, compared with a fall of 1.7 pence a year ago. Diesel prices rose by 2.5 pence per litre this year compared with a fall of 2.3 pence a year ago.

Partially offsetting these upward pressures were downward effects from sea and air transport where seasonal price reductions were larger than a year ago.

There was also a large upward pressure from clothing and footwear where prices rose by more than a year ago across a range of items.

In the year to September, RPI annual inflation fell by 1.4%, compared with a fall of 1.3% in August. The main factors affecting the CPI also affected the RPI, however the different methods used to measure the price of new cars in the CPI and RPI resulted in a larger upward contribution to the RPI (compared with the CPI) from the purchase of vehicles.

RPIX inflation - the all items RPI excluding mortgage interest payments - was 1.3% in September, down from 1.4% in August.

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in August, at 1.6%, was above the provisional figure for the European Union as a whole of 0.6%.

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