Inflation falls again
The latest price inflation figures show another sharp fall in the rate of the Consumer Prices Index (CPI) in January, as the VAT increase from last year falls out of the calculation.
The Consumer Prices Index (CPI) measure of price inflation now stands at 3.6%, down from 4.2% the previous month.
The Retail Prices Index (RPI) measure of inflation also fell, from 4.8% in December to 3.9% in January 2012.
VAT falling out of the calculation appears to have been the biggest contribution to these inflation falls.
In January 2011, the main rate of VAT increased from 17.5% to 20%. This had an inflationary impact on prices at the time.
CPI inflation now stands at a 14-month low, although it remains above the government established target of 2%.
Whilst there is little prospect of any interest rate rises this year, these falling inflation figures will bring some hope to savers who have seen the real value of their cash eroded in recent years.
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