Uk Inflation Reaches A Low Of 3%!

By Author: Sadhana Dhanyal
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The Office for National Statistics (ONS) has made a statement that Consumer Price Inflation (CPI) slowed to 3% in February - slightly more than the 3.1% expected by analysts. It is believed that today's figures from the ONS will reinforce that inflation is on a downward trend after reaching a 14-month high of 3.5% in January.

It is true that inflation has been rising over the last few months. And, the primary reason for this being; higher petrol costs and the effects of the reduction in the standard rate of VAT. The Bank of England Governor, Mervyn King, has already warned that inflation will rise but recently had to write to Chancellor, Alistair Darling, to explain why inflation had exceeded the 2% target.

The Bank had recently predicted that inflation will fall to 1.8% towards the end of the year. This was cited because the economy remains fragile as it continues to recover from the recession. Recession is still looming large on our heads casting its ill effects on almost everything we seem to undertake.

Another forecast, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis ...
... for many wage deals, remained unchanged at 3.7% in February. In the minutes of the meeting of Bank of England's March meeting, concerns were raised for inflation.

The minutes revealed that, Members drew different inferences about how the balance of risks to inflation was evolving. Some members considered that the upside risks to inflation had increased slightly over the month; others felt that the balance of risks had not changed materially.

However, the good news is that the inflations is expected to ease in February. Bank of England Governor, Mervyn King, has warned that inflation will rise but had to write to Chancellor, Alistair Darling, to explain why inflation had exceeded the 2% target.

During the course of the time, analysts expect Retail Price Inflation (RPI) in February to remain unchanged at 3.7%. RPI includes mortgage costs and is used as the basis for many wage deals. The various steps taken will reinforce the fact that inflation will fall down significantly.

According to minutes, the MPC believes that it was increasingly likely that CPI inflation will remain well above the target over the months ahead. It also added that MPC would keep under close review the extent to which these shocks to the price level were feeding through into inflation expectations.

Sadhana Dhanyal,content developer. For more information: Secured Home Loan


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