Inflation on the rise again

Posted on May 17th, 2011 | Categories - Financial News

CPI (Consumer Price Index) rose to 4.5% in April after its fall to 4% in March. CPI is now at its highest level since October 2008.

However, RPI (Retail Prices Index) which includes the cost of borrowing actually fell slightly to 5.2% from 5.3% in March.

This rise in CPI was greater than many experts had predicted and can be attributed to a increase in transport costs, particularly air fares which rose by 29% from March to April. Rising alcohol and tobacco costs also contributed.

The new figures will increase pressure on the Bank of England to increase interest rates, although the rise announced today was predicted by the Bank in last week’s inflation report.

The increase in CPI is particularly bad news for those people with fixed incomes, who will continue to see their buying power eroded.

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