Inflation hits 4.7%

by Richard Kilner

Story link: Inflation hits 4.7%

Inflation has risen again, with the official Consumer Price Index (CPI) rate up to 4.7% in August.

The new rate, up 0.3%, is the highest since records began in 1997, and remains more than twice the official government target rate of just 2%.

As with previous months, inflation is being driven by large and continuing rises in the costs of fuel and food.

However, the Retail Price Index (RPI) has fallen from 5% to 4.8%, marking a more convergent move from the two primary measures of inflation.

RPI is frequently used during salary negotiations and is therefore important despite not being used as the official inflation rate.

The record-breaking CPI rate will mean that the Governor of the Bank of England, Mervyn King, will have to write another letter to Chancellor Alistair Darling, explaining the reasons behind inflation being so out of line with the government’s target.