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UK Inflation 4.4% in February 2011

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CPI annual inflation – the Government’s target measure – was 4.4 per cent in February, up from 4.0 per cent in January.

The largest upward pressures to the change in CPI inflation came from:

  • domestic heating costs, particularly gas where average bills rose by 0.4 per cent between January and February this year but fell by 2.8 per cent a year ago, a record fall for a January to February period. There were smaller upward effects from electricity, where prices rose this year but were unchanged in 2010, and domestic heating oil, where prices fell by less than a year ago
  • clothing and footwear where prices, overall, rose by 3.6 per cent following the January sales. This was a record January to February movement, and compared with a 2.0 per cent rise a year ago. The upward effect came from garments, particularly women’s outerwear
  • miscellaneous goods and services: the upward contribution here was driven principally by financial services where charges were little changed between January and February this year compared with a 1.3 per cent fall a year ago. The main upward effects came from mortgage arrangement fees and foreign exchange charges
  • recreation and culture: where prices, overall, rose by 0.3 per cent this year but were little changed a year ago. There were small upward pressures from books and from games, toys and hobbies, particularly computer games, partially offset by a small downward pressure from digital cameras and camcorders

The largest downward pressure to the change in CPI inflation came from:

  • alcoholic beverages and tobacco where prices, overall, fell by 1.1 per cent compared with 0.4 per cent a year ago. The 1.1 per cent was a record monthly fall and follows the record monthly rise of 4.6 per cent between December 2010 and January 2011. The downward effect on the change in CPI inflation was driven by alcoholic beverages, particularly spirits

In the year to February, RPI annual inflation was 5.5 per cent, up from 5.1 per cent in January. The main factors affecting the CPI also affected the RPI.

RPIX inflation – the all items RPI excluding mortgage interest payments – was also 5.5 per cent in February, up from 5.1 per cent in January.

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in January was above the provisional figure for the European Union. The UK rate was 4.0 per cent whereas the EU’s as a whole was 2.8 per cent.

The next publication date is 12 April 2011.

 
 
 
 
Notes:

CPI is the consumer prices index. It is the measure adopted by the Government for its UK inflation target. The Bank of England's Monetary Policy Committee is required to achieve a target of 2 per cent. In the June 2010 Budget, the Chancellor announced the Government’s intention to also use the CPI for the price indexation of benefits and tax credits from April 2011. Prior to 10 December 2003, the CPI was published in the UK as the harmonised index of consumer prices (HICP).

RPI is the retail prices index - the uses of the RPI and its derivatives include indexation of index-linked gilts. Historically the RPI has also been used for indexation of pensions and state benefits.

Inflation is the percentage change in the index compared with the same month one year previously.
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