Chancellor Brings In New Inflation Measure

The Chancellor of the Exchequer’s new measure of inflation, the Consumer Price Index, has come into force, in a move that will see the UK move below target.

The CPI, which excludes housing and council tax costs, currently stands a 1.4%, which is well below the 2% target set by Gordon Brown in the pre-Budget report earlier this month. However, analysts expect the figure to climb gradually.

The new inflation target will provide the focus for the Bank of England’s interest rate discussions next month. However, the retail prices index, which is sometimes called the headline rate of inflation, will remain the figure used by the Government to set benefit levels.

The latest figures from the Office Of National Statistics show that the underlying rate of inflation, which excludes mortgage interest payments, dropped to 2.5% in October, down from 2.7% in the previous month.

The headline rate, which includes mortgage interest payments, dropped to 2.5%, down from 2.6% in September, bringing it inline with the Government’s target of 2.5%.

The all items Retail Prices Index for September 2003 was 182.7.

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