Inflation still rising as the cost of fuel continues to bite
INFLATION rose 0.2% last month to 2.9%, according to official figures.
The Office for National Statistics said the largest upward contribution came from motor fuels and clothing and footwear.
Downward pressure came from air transport.
The Consumer Prices Index (CPI) inflation rate is slightly above the figures seen over the previous 12 months but below the levels reached between the start of 2010 and spring 2012.
Richard Campbell of the Office for National Statistics said: “A 1p rise per litre in the cost of petrol and diesel, compared with a fall of around 4p per litre in the same month last year was a significant factor along with clothing and footwear.
“We would have seen a larger rise in the month but for air fares, which after a rise last month fell back and brought downward pressure, particularly in Europe and long haul.”
Inflation has been running above its 2% target for the past four years but the Bank of England believes it will rise further to around 3% during 2013. The Bank expects inflation then to ease back and return to target in 2014.
If the rate had risen to 3%, new Bank of England Governor Mark Carney would have been in the embarrassing position of having to write to Chancellor George Osborne to explain why.
Businesses in Greater Birmingham have called for urgent measures to bring down inflation.
Steve Brittan, president of Birmingham Chamber of Commerce Group, said: “Further stabilisation of the inflation rate is needed for businesses to build confidence.
“Runaway prices can stifle investment plans and the 2% inflation target set by the Monetary Policy Committee is escaping us.
“Rising inflation, coupled with slow economic growth and high employment, is a deadly combination for business. Even minor price rises can harm business confidence.”
