Inflation Falls to 5% in October

The rate of Consumer Prices Index (CPI) inflation in the UK has fallen slightly between September and October, dropping from a rate of 5.2 per cent to 5 per cent last month.

This has been pushed down to this new lower figure, thanks to falling prices of food, fuel and flights. But this rate, although an improvement, is still higher than the Bank of England’s target of 2 per cent.

Retail Prices Index (RPI) inflation – including mortgage interest payments - has also seen a fall from 5.6 per cent, to 5.6.

However, the government has made it clear that they recognize that inflation is still high, despite these recent falls.

A spokesperson for the Treasury said, “These are difficult times for households as prices continue to be affected by conditions in the global oil and gas markets.”

MPs are set to have a debate about a motion soon, which will urge the government to limit any increases in the price of petrol in the UK.

This comes as plans have been announced to increase fuel duty by 3p a litre in the new year.

Petrol has amongst the products that have seen a fall in price according to the Office for National Statistics.

The price of petrol has fallen by 0.5p a litre, reflecting falls in the price of crude oil due to the current, weakened state of the global economy.

Air fares, which have always been very changeable, have also seen a fall of 6 per cent, in comparison to their price in the previous year.

Food prices have also been driven down by heavy supermarket discounting and a good harvest this year.

However, some goods have seen an increase in cost – such as clothing, electricity and gas – which has put an increased level of pressure on people feeling the pinch financially.

With price rises from each of the major energy suppliers, there has been a significant increase in the average domestic fuel bill, which has been predicted to push the inflation figures back up in November.

Despite this, the Bank of England has insisted that it feels the rate of inflation will in fact drop in 2012 as many prices will fall back again and the impact of the government’s increased VAT will no longer be felt.