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October : UK inflation ahead of EU averages

UK inflation is continuing to outstrip that of the European Union, according to the latest figures from the Office of National Statistics.

Its figures, released last week, showed that CPI annual inflation rose to 3.2% in October, up from 3.1 for both September and August respectively. The provisional figure for the European Union as a whole stood at 2.2% according to ONS.

For the period between September and October the CPI rose by 0.3% compared to 0.2% a year ago. The main pressures on prices came from the impact of the rise in fuel prices and the increase in road fuel duty which took effect from the beginning of October. In the games, toys and hobbies sector the growth of computer games bought on the high street rather than online pushed up prices.

There was good news in the food sector however where widespread downward effects – particularly on vegetables and meat -- helped to push prices down. Annual inflation as recorded by the retail prices index however fell to 4.5% in October, down from 4.6% the month before. RPIX inflation – the all items RPI measure excluding mortgage interest payments -- remained unchanged at 4.6% in October.

Retailers will be anxiously watching the CPI figures over the coming months.

The ONS has also just published its latest retail sales figures which showed the volume of retail sales in October was 0.1 % lower than in October 2009 although it grew by 0.5% between September and October.

British Retail Consortium director general Stephen Robertson said the figures were worrying. “This is weak growth and even weaker when you remember VAT is up on a year ago and inflation is running at more than 3%,” he said.

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