Tuesday, January 19, 2010

Rates Of Inflation Update

Circular No. NP/011/10/MC

19th January 2010


Dear Colleagues,

Inflation Rates Circular

The December rates of RPI and CPI were published by the Office for National Statistics on the 19th January 2010. The next publication date is the 16th February 2010.

December 2009 retail prices index rate is 2.4%.This is up from 0.3% in November. The last time there was an increase in the annual inflation rate greater than 2.1 per cent was between June and July 1979, when the rate increased from 11.4 per cent to 15.6 per cent.

This record increase is due to a number of exceptional events that took place in December 2008:
the reduction in the standard rate of Value Added Tax (VAT) to 15 per cent from 17.5 per cent
sharp falls in the price of oil
pre-Christmas sales as a result of the economic downturn
In addition to these events there was also significant upward pressure to the change in the RPI annual rate from housing. Within housing the main upward effect came from mortgage interest payments which rose this year but fell significantly a year ago when most lenders passed on the one and a half point decrease in the Bank rate.

The Government’s preferred measure of inflation, CPI, is at 2.9%, up from 1.9% in November.

In pay submissions the RMT will continue to emphasise that your financial commitments have increased at a much greater rate than inflation and your living standards have suffered as a result.

Yours sincerely,

Bob Crow
General Secretary

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