Policy Committee in its deliberations on interest
rates since November 2009.

The sentiments now
are that interest rates will have to rise from their historic
low of 0.5% to put the squeeze on inflation.
% increase on a year earlier
RPI except mortgage interest payments
Five of the 14 groups that make up the RPI posted
an increase of the overall rise of 4.8% or more.
The clothing and footwear group’s 10.3% rise included
double digit percentage rises on women’s,
men’s, and children’s clothing of 13.8%, 11.1% and
11.7% respectively. Meanwhile, the motoring expenditure
group’s 9.1% rise included a 29.1% rise
Inflation rise piles on
the misery
Inflation has risen and will almost certainly rise
further as the VAT rise to 20% and fuel duty rises
will impact on next month’s figures for January. As
it was, higher fuel prices and dearer food had the
greatest impact on the rise for December.
Under the Retail Prices Index (RPI), the rate of
inflation was 4.8% in December against 4.7% the
previous month.
TUC general secretary Brendan Barber said the
alarming rise in inflation will “make a tough year
for workers even harder to bear” and that “fuelling
inflation with a VAT hike will hit workers in
their wage packets”. The VAT rise is “bad for
working families and damaging for the economy
too,” Barber said.
Under the Consumer Prices Index (CPI), inflation
was up to 3.7% from 3.3% the previous month. The
rate is at its highest for eight months. This measure
does not include housing costs and is the measure
used by the coalition to update state benefits and
public sector pensions.
The CPI figure has been above the 2.0% target set
by the Treasury for the Bank of England's Monetary

in tax and insurance and a 12.6% rise in petrol and
oil prices. And the 4.3% rise in fares, included a
7.3% rise in rail fares.
Food prices rose by an average of 5.9%, but there
were substantial rises in butter (24.0%), tea (11.3%)
and lamb (11.8%).
The fuel and light group only showed an overall
rise of 2.8%, but “oil and other fuel” prices racked
up a 44.0% rise.
4.8% or more % Less than 4.8% %
Clothing & footwear 10.3 Fares etc 4.3
Motoring expenditure 9.1 Personal goods & services 3.9
Tobacco 8.4 Alcoholic drink 3.7
Food 5.9 Catering 3.4
Leisure services 4.8 Household goods 3.3
Household services 3.2
Housing 2.8
Fuel & light 2.8
Leisure goods 0.6
www.statistics.gov.uk/pdfdir/cpi0111.pdf
www.statistics.gov.uk/pdfdir/cpibrief0111.pdf
www.statistics.gov.uk/downloads/theme_economy/a-to-i-dec-2010.pdf
www.tuc.org.uk/economy/tuc-19007-f0.cfm