Articles > Inflation to halt Rate Cuts

The Consumer Price Index has actually been above the Bank of England’s 2% for quite some time. During the month of August the CPI was recorded at 2.4%. The CPI is currently above this now, but has not reached the 2.7% predicted by many economists.

The Office of National Statistics blamed the increasing price of crude oil for the rises in inflation. Natural disasters were the main cause of this (in the form of hurricane Rita and Katrina) which forced the closure of one quarter of the US’s oil production facilities for at least a week. During that time the cost of petrol here in the UK rose by a hole in the pocket burning 4.6p per litre in September. The high figure released by the CPI could have been a lot worse had it not been for the ongoing price war between airline companies.

Inflation was and is greatly affected by the rise in price of computer games consoles as well as theatre tickets. Inflation is said to have increased due to the dramatic increase in the price of games consoles from last year, when they were discounted heavily.

The Office of National Statistics has stated that the decrease in cost of foreign holidays and clothing (particularly women and children’s) had helped lower the rate of inflation. Every business in the city and possibly across the UK are looking to the Bank of England’s Monetary Policy Committee to further cut interest rates in November. They have remained at a stand still since August where the rates were cut from 4.75% to 4.5%, the first reduction in over three years. Some experts warned that fears of a further rise in inflation could delay that cut.