13.02.08 Fuelling inflation
Inflation is currently running at the highest level since June last year, and rising fuel costs are to blame that's the conclusion of the latest report on inflation by the Office of National Statistics (ONS).
The two indicators of inflation, the Consumer Prices Index (CPI) and the Retail Price Index (RPI), both show an increase. CPI puts inflation at 2.2%, up from 2.1% in December, while RPI shows inflation rose from 4% to 4.1% over the same period. It's the fourth month in a row that inflation has exceeded the government's target of 2%
The report points the finger at a number of factors including food and drink prices, but says the largest upward pressure came from an increase in the price of road fuels. The national average price of unleaded rose 1.3p in January alone, taking it to a total of 103.9p per litre. This time last year a litre of petrol cost 87.5p.
High fuel prices drive inflation because fuel is a fundamental to the infrastructure of the UK. Our food and basic goods are transported using it, and if the price goes up, so does the price of our goods. A small amount of inflation is healthy for the economy, but too much and we start to run into problems - missed mortgage payments, repossessions and unemployment.
Worse still, the report's inflation figures don't take into account the impact that the energy price rises in January will have, because the current model assumes it will take up to 4 months for the price rises to take effect. The full effects of inflation may also have been dampened by a decrease in clothing costs and cut-price offers on the High Street, which effectively offsets the problem of high food and fuel. Economists are warning that this, combined with two further 2p increases in fuel duty planned for April and October, will mean inflation will hit 3% by the end of the year.
The freight industry sent a letter this week to the Chancellor, asking him to scrap the 2p a litre increase planned for April, and in a letter to the Daily Telegraph, 11 leading business figures argued that they were being hit simultaneously by a slow down in the economy and rising fuel costs.
It said: "At 50.35p a litre, UK fuel duty for diesel and petrol is already the highest in Europe. Indeed UK diesel duty is double the EU average rate of 25p a litre. The chancellor now plans to increase this by 2p per litre from 1 April.
"Such an increase will generate further serious difficulties for the transport and forecourt industries, business drivers, those dependent on the car, and for businesses or individuals in remote or rural areas with no alternative transport options."
Have you noticed an increase in living costs? Are you worried about the effect that further inflation rises will have on you? Do you think the Bank of England is capable of controlling inflation?








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Welcome to Treasure Island ! (No, not for you and I brother) We are here to be systematically bled for the benefit of the few. Government figures for inflation, if we can believe them, include rises caused by the self same Government. Public Transport in my area is exactly the same as it was 45 years ago, i.e. diabolical. I know, I have personal experiences !
its not just the petrol thats going up its gas and electric and council tax and water all its about now is bigger profit for all these companys you see it every year bigger profits made this year than last year thats cause the price that they buy at is going up but they put that bit extra on to us just to make that bit more money
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