21
Apr
Inflation back inside target range
The possibility that interest rates may have to be raised to combat
a fresh spurt in inflation may have diminished after the latest
official figures showed a fall in the consumer prices index (CPI)
rate.
CPI inflation for March dropped from 3.2 per cent to 2.9 per cent,
bringing the level within the one per centage point permitted
variation from the two per cent target the Monetary Policy
Committee (MPC) is charged with aiming for.
Food and drink, transport costs and the cost of food were all
factors, as prices for these had moderated over the past
year.
With inflation falling again after February's jump - the first
since September 2008 - the situation may enable the MPC to maintain
the record low base rate level for some time to come, keeping
mortgage costs down as a result.
In his open letter to the chancellor following the jump in CPI
above three per cent last month, Bank of England governor Mervyn
King stated that he believed the downward trend in inflation was
"likely to resume in the coming months".
