Petrol drives inflation up to 2.2%

Posted on 12 February 2008 by (c) 2008 iCrossing Ltd.

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Inflation rose to 2.2% in January, according to figures released today.

The Office for National Statistics (ONS) says that Consumer Price Index (CPI) inflation increased by 0.1% for the 12 months to January, compared to December's figure of 2.1%. It attributes much of the increase to the rising prices of fuel and food.

Though analysts already expected inflation to rise over the next few months, the news will be unwelcome for the Bank of England, which is responsible for maintaining the index at a government-set target of 2.0%. Last week, the Bank's Monetary Policy Committee reduced the interest rate to 5.25%, a move likely to stimulate spending and add to the upward pressure on inflation.

Meanwhile, figures from the British Retail Consortium show that, after a disappointing December, retail spending picked up during January. The Financial Times writes that the increase will 'dampen' the prospects for further interest rate cuts this year.

Retail Price Inflation (RPI), which tracks additional prices including mortgage repayments, also rose slightly, from 4.0% in December to 4.1% in January.

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