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Fuel prices push inflation up again

Press Association
Tuesday 15 December 2009 10:41 GMT
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Higher petrol prices pushed inflation upward for the second month in a row in November, official figures showed today.

The Consumer Prices Index (CPI) rose to 1.9 per cent last month from 1.5 per cent in October, the Office for National Statistics (ONS) said.

Average petrol prices rose by 2.9p to 108.3p a litre in November, compared with a record 9.3p fall to 95.2p a year earlier - adding to inflationary pressure.

November's inflation figure is slightly higher than the 1.8 per cent expected by most City economists.

CPI is still currently below the Bank of England's 2 per cent target but could rise to 3 per cent or more early next year when the temporary VAT cut is reversed. This will put up prices - including petrol - across the board.

Other factors pushing up inflation in November included rises in second-hand car prices which contrasted with falls a year earlier. Airlines have also cut prices by less than a year ago and clothing prices rose by more than in 2008, the ONS added.

Despite the increasing pain at the petrol pumps, there was some relief for hard-pressed households in their shopping bills.

The ONS said food and non-alcoholic drink prices edged 0.6 per cent higher over the month but the annual rate of inflation fell to 1.1 per cent - the lowest level since May 2006 - thanks to falling vegetable, meat and dairy product costs.

The broader Retail Prices Index (RPI) - which includes house prices and mortgage interest payments - meanwhile returned to positive territory, with prices 0.3 per cent higher than a year ago.

The RPI was last positive in January this year, but has showed negative since March as the impact of house price falls and interest rate cuts last year worked their way through the figures.

House prices fell a year earlier but rose last month, while mortgage interest payments also slid in November last year when lenders passed on the Bank of England's 0.5 per cent emergency cut in interest rates in the wake of the financial crisis.

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