According to the Office for National Statistics, inflation is still too high and above the Bank of England’s target rate of 2.5%. And the culprit? Clothes and oil!
The Retail Prices Index showed an annualised rate of inflation of 2.9%. This is 0.4% higher than required. Oil prices have been high with the Iraq crisis and discount clothing sales seemed to spread wider throughout December as well as January this year. This means less of a drop off in the price of clothes.
The Bank of England cut interest rates recently from 4% to 3.75%. Mervyn King at the Bank of England said that the cut was to help keep the BoE’s monetary policy in line with that of the Bank, in terms of forecasts for economic growth and inflation.