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Inflation drops back to 4.2 per cent
20/01/2012
During December inflation dropped to 4.2 per cent as the cost of living in the UK increases. This drop in consumer prices rate of inflation is the fastest one for three years from 4.8 per cent in November. The last time this happened in the UK was in 2008 when Alistair Darling’s emergency VAT cut was announced at the peak of the world’s financial crisis.
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The Office for National Statistics said “The largest downward pressures to the change in CPI annual inflation between November and December came from petrol, gas and clothing.” The CPI rate is still more than double the 2 per cent target set for the Bank of England by the Government but the Bank has insisted that inflation will steadily decrease from its September peak at 5.2 per cent.
If the Bank of England do as predicted and the rate of inflation decreases the interest rate will not rise for many years to come and Think-tank Cebr has forecast they will be held at their all-time low of 0.5 per cent until 2016.
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Even though the CPI rate is still double the targeted rate, we can expect come sharp aggressive series of drops in the first half of 2012 but we probably will not see it reach the target of 2 per cent in 2012. The ONS have reported that retail inflation (which includes mortgage costs) fell sharply too, from 5.2 per cent in November to 4.8 per cent last month. They also added that Decembers fall in inflation was due to the reversal of factors that pushed inflation up in December 2010.
Consumers were lured with price reductions before Christmas, with the retailers urging them to spend their money particularly in clothes shops, whereas in 2010 prices were raised in anticipation of the January 2011 rise in sales tax.
Other pressures included a rise in food prices which grow by 1.4 per cent month on month from early October and the rise in mobile phone charges by 1.3 per cent.
Living costs seem to go on the increase month after month, untie some equity from your property and see those worries go away. The Right Equity Release is able to offer independent advice with a free no obligation initial meeting, if you can’t wait that long to see how much you can free up use our Right Equity Release Calculator.
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