The rate of inflation faced by households in the UK slowed notably in the year to October 2013, the lowest since September 2012, according to the Office for National Statistics (ONS) monthly Consumer Price Index (CPI) report. CPI, the headline measure of inflation, grew by 2.2% in the twelve months to October, compared to 2.7% in September 2013, it was reported on Tuesday.
According to the ONS, the sectors that made the largest contributions to the lower rate were transport and education. Downward price movements were recorded for petrol and diesel, with many of the major supermarket chains dropping fuel prices on the back of decreases in wholesale prices. Lower air fares and prices for second hand cars also contributed to the slowdown in inflation.
Prices in the education sector increased overall during the year, with the continuing roll-out of the higher rate of tuition fees. However, because many students are already paying the higher rate of fees, the increase was smaller in percentage terms for the year to October.
Also, CPIH, a new measure which includes the costs of owning, maintaining and living in their own homes that owner occupiers have to pay, showed a slower growth of 2.0% in October 2013, down from 2.5% from the previous month. RPIJ, an improved version of the Retail Prices Index (RPI), which is calculated using formulae that meet international standards, grew by 1.9% in October, compared to the September figure of 2.5%.
The ONS added that the three main contributors to the 12-month inflation rate in the last five years have been food and non-alcoholic beverages; housing, water, electricity, gas and other fuels; and transport (including motor fuels). A combination of these three sectors have accounted for over half of the 12-month inflation rate each month, on average.
These lower inflation figures indicate that the Bank of England is considerably closer to its inflation target of 2%, which it has exceeded since December 2009, the BBC stated today. However the broadcasting company said price rises recently announced by most of the UK’s large energy firms have yet to take effect and are expected to have an impact on inflation in near future.