By Maximilian Clarke

The UK’s inflation indexes both fell over the past month, the Office for National Statistics today confirmed.

The retail prices index (RPI) eased back 0.2 points to 5.4% as widespread discounting by supermarkets saw the mean price of food fall. The broader consumer prices index (CPI) also dipped 0.2 points to 5.0%- the first time either index has seen significant losses after nearly years of above average price gains.

“This will trigger another round of letters between Mervyn King and Chancellor George Osborne, with King having to explain the reasons why inflation in the UK has been above the Bank’s 2% target for the past 23 months,” commented Jeremy Cook, chief economist at World First forex brokers.

“We are in agreement with the BOE that inflation will be tamed over the course of the next year, as certain extraordinary items will fall out of the year-on-year figures. The main cause of price increases in the UK over the past 12 months is the 2.5% increase in VAT, introduced in January.

“The weak pound won’t have helped either. This means only one thing in our eyes; further quantitative easing past February, when the latest injection of £75bn is expected to run out.”


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