Earlier this week we had 2 different sets of inflation figures announced. The Consumer Price Index (CPI) showed prices had risen by 3.2% in the 12 months to the end of February. This is an increase on the January 12 month figure of 3%.

However, the retail price index (RPI) showed that inflation had fallen to zero.

Where is there such a difference between the figures?

The RPI statistics includes housing costs and so has shown a “zero” figure due to the recent falls in interest rates. However, consumer goods are still rising, particularly food and petrol. This has therefore resulted in the increased rate to 3.2%. This is mainly due to the fall in sterling, the effect of which has been passed on to the consumers by way of higher prices.

A number of economists still expect CPI to fall in the coming months, since retailers are likely to have to reduce prices in light of reduced consumer spending.

This entry was posted on Thursday, March 26th, 2009 at 9:16 am and is filed under finance general, interest rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.