Inflation continues to ease back

By MICHAEL CLARKE
Updated:

 

INFLATION eased back for the second month in a row in November as the price of petrol continued to fall from record highs.

Inflation, as measured by the rise in the Consumer Prices Index (CPI), fell to 2.1%, close to the Bank of England's preferred level of 2%.

It was only the second time in more than a year that the CPI has fallen, with downward pressure from petrol prices at the pump and air fares.

The average price of ultra-low sulphur petrol was down by 3.6p per litre, compared with a rise of 1.1p during the same period last year.

Restaurant bills and the cost of hotel rooms also fell as the main summer holiday period came to an end and the hospitality industry entered into a quiet period before the run-up to Christmas.

However, cigarettes became more expensive with retailers passing on manufacturer's price increases, imposed in October. Alcohol and meat products also hit shoppers' pockets through higher prices than last year.

Retail Prices Index inflation also continued to fall, down to 2.4% from 2.5% in October.

Howard Archer, chief UK economist at Global Insight, said the figures would provide some relief for the BoE.

He said: 'A very pleasing set of data for the Bank of England - annual consumer inflation fell more than expected and is nearly back to its target level of 2%, core inflation eased back to a five-month low of 1.5%, and both service sector and goods inflation moderated.

'This indicates that intense competition on the high street and through the supply chain, below-trend growth and continuing wage moderation are containing the pass through effects from extended high oil prices.'

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