High energy bills fuel inflation

Published:
16 September 2008
Topic:
News,Gas & Electricity

New figures show that inflation reached 4.7% last month, thanks in the main to soaring utility bills which saw double-digit rises.

The increase means that Bank of England Governor Mervyn King must now write another letter to Chancellor Alistair Darling explaining why inflation is still more than 1% above the 2% target.

The figures from the Office for National Statistics (ONS) show that the rises in energy tariffs sent the Consumer Prices Index (CPI) up 0.3% from July's figure of 4.4%.

Nearly all of the increase in the official rate of inflation was due to rising energy costs, with electricity prices up by 18% year on year and gas rocketing by 27.7%, the ONS said.

Higher food prices also caused some upward pressure, but the ONS said falling vehicle fuel prices helped offset the rise.

The ONS figures also revealed that property prices contributed to a drop in the Retail Prices Index (RPI) for the first time since March. RPI, which includes housing costs and mortgage interest repayments, dipped to 4.8% last month from 5% in July.

Copyright © PA Business 2008

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