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Bank of England inflation target called into question

Saga today expressed concern that older people are continuing to experience higher costs of living than the rest of the population.

Inflation has fallen this month, reflecting a sharp decline in electricity and gas price inflation as last Septembers price rises have dropped out of the annual rate of inflation. However, with price rises announced for later this year, this is likely to prove a short-lived easing of inflation. Indeed, we expect that this is the low point in the current inflation cycle.

It seems, therefore, that unless the Bank of England has given up on reaching its target rate of 2%, it may be setting itself up for a fall as these energy price rises will undoubtedly make this target impossible to reach next month.

– Dr Ros Altmann, Director-General, Saga

TUC: Fall in inflation won't make up for sluggish wage growth

Brendan Barber, Trade Unions Congress Credit: Reuters

Commenting on the inflation figures today TUC General Secretary Brendan Barber 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.

"Low-paid households will continue to feel the squeeze, especially with the new hike in energy prices that will see bills increase by as much as nine per cent. When you factor in plans to freeze benefits many families will still be under immense pressure to make ends meet."


Future rate rise warning despite drop in inflation

This RPI announcement reveals the scale of the potential damage to our high streets that will follow if the Government follows previous practice and translates it directly into April's rate increase.

The retail industry is the UKs biggest private sector employer, providing crucial first jobs to a million 16-24 -year-olds. Expecting retailers to bear a huge rates hike for the third year running can only lead to fewer chances of work, less investment and more troubled high streets.

The Government must recognise that retail has already contributed its fair share to the Exchequer and freeze business rates in 2013. It also needs to reform the mechanism for setting future increases so that it is fairer and less volatile.

– Stephen Robertson, British Retail Consortium

Fall in inflation 'likely to be the last for a while'

UK inflation fell to within a whisker of its 2% target in September, although the fall is likely to be the last for a while... As expected, the main downward effect came from last years rise in utility prices dropping out of the annual comparison... The recently announced utility price increases will add 0.1% to inflation for each of the next 3 months. And food prices could start to rise as past commodity price increases feed through, while the rise in tuition fees will boost inflation in October.

– Vicky Redwood, Capital Economics


Drop in inflation expected to be short-lived

Consumer price inflation could well be pushed back above 2.5% by the move back up in petrol prices, some utility bills rising in October and November and likely higher food prices largely due to poor harvests pushing up grain prices.

– Howard Archer, chief economist at IHS Global Insight

A near tripling in university tuition fees should push CPI inflation up in October, with further food and energy price increases likely to add to that rising trend.

– Philip Shaw, chief economist at Investec Securities

Inflation expected to fall

Inflation is expected to have dropped to its lowest level for nearly three years in September when official figures are announced on Tuesday morning.

Most experts believe the figures will show consumer price index (CPI) inflation falling to 2.2% in September from 2.5% seen in August - but some believe it could even drop to below the Government's 2% target.

However, there are fears that the respite may only be brief as energy bills start to rise.

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