In the twelve months to January, the consumer prices index (CPI) rose by 3.5% in the year. This was up from the 2.9% rise recorded in
The Bank of England has been under pressure over most of 2009. Higher than expected inflation has meant that the BOE governor – Mervyn King has had to write to the Chancellor of the Exchequer to explain why inflation has been above the Governments target of 2%.
The Bank anticipates that inflation will fall later this year. If they are proved correct it may even stay below the target for the next two years
The Governor has indicated that the recent high level of inflation have been down to the VAT change in December and increases in oil prices.
In the year to January, the all items retail prices index (RPI) which is used to negotiate salary increases rose by 3.7%, up from 2.4% in the twelve months to December as last year's interest rate cuts dropped out of the annual calculations.
Over the same period, the all items RPI excluding mortgage interest payments index (RPIX) rose by 4.6%, up from 3.8% in December.
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