18 October 2011
UK inflation numbers just out from the Office of National Statistics: 12 months to end September 2011:
Consumer Price Inflation came in at 5.2% (an increase from 4.5% last month)
Retail Price Inflation came in at 5.6% (an increase from 5.2% last month)
The figures are high and will form the basis of calculation for DB scheme benefit increases as at end September : compared to 4.2%/5.0% (CPI/RPI) for June and 4.1%/5.3% for March.
Schemes calculating benefit increases at the end of December have so far seen prices increase by 3.5%/4.2% for the 2011 year to date, and this calculation will be completed by data from the last quarter of this year.
For reference, prices increased by 1.3%/1.1% in Q3 2011 and by 1.7%/1.4% in Q4 2010, so a replay of the last quarter’s price activity over the next quarter would lead to a slight softening in inflation by year-end : perhaps down to something close to 4.9%/5.3%.
The effect of the VAT increase to 20% will drop out of the calculation in January 2012.
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Author: Martin Veasey
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