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News Article

Inflation slows to the lowest rate for nearly three years

Published 16 October 2012 by

The latest official figures measuring the increase in the cost of living in the UK (from the Office for National Statistics) show that the rate slowed down to the lowest rate for nearly three years.

The Consumer Prices Index (CPI) measure of inflation showed a rise of only 2.2% in September this year, which was down from 2.5% in August. This is the slowest rate of inflation since November 2009, when it was 1.9%.

The Government uses the September CPI measure of inflation to work out the increases in benefits and the state pension the following April. If the cost of living is increasing slowly, benefit and pension payments will rise slowly too.

The BBC reports that benefits like Jobseeker's Allowance and income support could rise by 2.2% in line with inflation, although this remains to be seen as George Osborne recently announced he wants to cut billions from the benefits budget. It's expected that the state pension will increase above inflation: by 2.5%, as the BBC tells us.

Looking more closely at September's figures, housing, water, gas, electricity and other fuel costs hadn't risen as much as they had this time last year. These expenses rose by 0.1% between August and September this year, compared with 3.5% between August and September last year. However, many energy companies are announcing price rises at the moment, so consumers will need to spend more on heating their homes over the winter.

This year, September saw bigger increases in the cost of transport. Petrol prices rose by 3.9p per litre between August and September this year, compared with a fall of 0.3p per litre over the same period last year.