Core inflation surged in December largely because of higher fuel duties according to latest Office for National Statistics data, justifying, economists say, the Bank of England's interest rate rise of last week.
According to the key measure of price increases, as dictated by HM Treasury, the consumer price index rose to an annualised rate of 3% in the last month of 2006, up from 2.7% the previous month. The retail price index (RPI) - which was replaced by CPI as the government’s favoured index, but which is still used for many benchmarking exercises, particularly wage negotiations in the private sector – rose to a rate of 4.4%, up from 3.9% in November. RPI excluding mortgage interest payments, RPIX, rose to 3.8% from 3.4%. Key to this across-the-board surge in CPI prices was the government’s...
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