Inflation falls below Bank target - Economy - News - Moneyfacts

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Inflation falls below Bank target

Inflation falls below Bank target

Category: Economy

Updated: 14/07/2009
First Published: 14/07/2009

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UK annual inflation the fell in June as the consumer price index (CPI) dropped to 1.8 per cent, down from 2.2 per cent in May.

The figures from the Office for National Statistics (ONS) mark the first time since September 2007 that the measure has been below the Bank of England's target of two per cent.

The ONS said the largest downward contribution to the change in the CPI annual rate came from lower prices for food and soft drinks, while a slowing in price rises on furniture and other household equipment also had an effect.

The falls were partly offset by upward pressure from recreation and culture, which the ONS said was mostly due to computer game prices rising more than they did a year ago. Audio-visual equipment also had an upward effect.

In the month, the Retail Prices Index (RPI), which takes housing costs and home loan repayments into account and is considered a key inflation indicator, fell to -1.6 per cent from -1.1 per cent.

This was partly caused by the falling price of food during the last 12 months, while a contribution was also made by household goods.

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