Inflation up again

The consumer prices index (CPI) rate on inflation rose again in August, it has been revealed.

CPI increased from 4.4 per cent to 4.7 per cent during the month, largely due to further increases in food and domestic energy inflation, the Office for National Statistics (ONS) disclosed.

This was despite the fact that lower oil prices are starting to feed through into petrol costs.

It is the fourth successive month that the CPI rate has been above its maximum permitted level of three per cent, obliging Bank of England governor Mervyn King to write a letter explaining the reasons for this and the Monetary Policy Committee's approach to chancellor Alistair Darling.

Mr King stated in his letter that the MPC has become convinced that a slowdown in growth is required to bring down prices and curb wage inflation pressures, explaining that this has been the reason for it keeping the base rate at five per cent.

Such an approach may continue as inflation carries on rising, which may dent any hopes that mortgage interest rates will be reduced anytime soon.

For those looking to live in London, this could mean that now is a much better time to rent than to buy.

Published 16th September, 2008

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