Inflation unchanged

Posted on June 14th, 2011 | Categories - Financial News

Both the Consumer Prices Index (CPI) and the Retail Prices Index (RPI) remained unchanged last month.

The Office for National Statistics (ONS) reported that CPI remained at 4.5% whilst RPI, which includes the cost of borrowing, stayed at 5.2%.

Fuel and food prices, including the cost of alcoholic drinks were among the main contributors. Over the past year fuel prices have risen by 13.7% with alcohol and tobacco rising by 9.8% over the same period.

Whilst the figures were in line with market expectations and they come on the back of sharp rises in April. The Bank of England expects inflation to rise above 5% over the next few months despite the fact that it is already well above the 2% target figure.

Today’s figures will change little, the Bank of England will still need to balance the damage that an interest rate rise may have on the wider economic recovery with the effects of rising inflation.

Rising prices particularly effect pensioners, the low paid and those on fixed incomes. It also makes life hard for savers who are struggling to find bank accounts which offer a rate of interest sufficient to maintain the real value of their savings.