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Inflation at Two Per Cent

Written By On 14/01/2014

December 2013 helped inflation reach it's lowest rate for over four years according to the Office for National Statistics.

This now means it has reached the Bank of England's two per cent aim, down by 0.1 per cent from the previous month. This was a welcome surprise to many as it was thought that it would be no difference to November.

The figures show nearly a one per cent drop from six months earlier. Energy and petrol have seen major rises, but smaller increases in the price of food plus price slashing in stores helped keep inflation lower.

More good news for the British public was that supermarket stores Asda, closely followed by Tesco, have both announced that petrol and diesel will be coming down from today. Their petrol forecourts will both be 2p a litre cheaper.

Asda have stipulated that their petrol stations will charge a maximum of 126.7p a litre for ordinary petrol and 133.7p a litre for standard diesel.

This brings diesel down to it's cheapest level in one and a half years.

The AA were very happy to hear this news and said,

We hope that other supermarkets and fuel retailers follow the lead of Asda and Tesco to cut their prices at the pumps otherwise we just end up with a fuel price lottery based on proximity to certain supermarkets.

Experienced economic adviser Andrew Sentance and former member of the BOE's monetary policy committee commented,

Stronger growth here in the UK could push up wage costs and a rebound in the global economy is likely to push up energy, food and commodity prices once again. So we cannot be sure that this return to the inflation target will be sustained through 2014.

The monetary policy committee will feel a lot easier as they have kept interest rates at a historically low half a per cent.

Economist Chris Williamson feels that the two per cent inflation rate is sustainable for a while yet. He said

Talk of higher rates has increased in recent weeks because the Bank of England has been wrong footed by the strength of the economy.

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