UK inflation rate slows to 2.2% in September
16th October 2012

The pace of price rises in the UK slowed in September, pushing the inflation rate down to its lowest level for nearly three years.

The Consumer Prices Index (CPI) measure of inflation stood at 2.2%, down from 2.5% in August.
The CPI level in September is usually used to work out the rise in a range of benefits from Jobseeker's Allowance to income support in April next year.

But the basic state pension will rise by a minimum of 2.5%.
This is the result of a government guarantee and would see the state pension increase by at least £2.69 a week.
The Office for National Statistics (ONS) said that the Retail Prices Index (RPI) measure of inflation, which includes mortgage payments, stood at 2.6% in September down from 2.9% the month before.

The CPI level was much lower than the rate seen in September 2011, when it stood at 5.2%.
The CPI rate of inflation was at its lowest rate since November 2009. The slowdown in inflation was the result of gas and electricity price rises in 2011 falling out of the comparison calculation.

However, the ONS said the recent spate of energy bill increases would put pressure on inflation as time went on. This was likely to lead to similar increases in inflation as seen last year, when utility price increases added 0.45% to CPI, the ONS said.

Rising fuel prices also put upward pressure on CPI in September, when petrol rose by 3.9p a litre between August and September compared with a fall of 0.3p a year ago.

A number of groups have pointed to the energy price rises as a concern for future inflation levels.
Prices are likely to go up at a faster rate when energy cost changes come into effect

"While we expect inflation to fall in 2013, the expected increase in consumer and retail price inflation in October is concerning," said David Kern, chief economist at the British Chambers of Commerce (BCC).

"Some of the recent announcements of increases in utility prices and university tuition fees will only affect the October index.

"Falling inflation benefits the UK economy as it reduces the squeeze on businesses and consumers and underpins domestic demand at a time of fiscal austerity and weak growth in the global economy."

Brendan Barber, general secretary of the TUC, said: "This fall in inflation is welcome. However, these figures should be seen in the continuing real wage falls, which have meant families getting poorer every month for the last three years."

Commentators have also suggested that rising food prices could also push inflation back up.