SME NewsCurrent Inflation Rate – June 2009
Latest CPI and RPI inflation figures raise deflation fears and calls for further active measures to counter recession.
Official figures for June 2009 released today show large falls in both the Consumer Prices Index (CPI) and the Retail Prices Index (RPI). The figures raise the very real spectre of deflation with the RPI heading into negative territory not seen since recods began in 1948.
At 1.8% CPI has fallen below the government’s 2% inflation target for the first time since September 2007.
The main downward pressure came from food and non-alcoholic drinks where prices fell between May and June in 2009 compared to increases in the cost of food during the same period in 2008.
David Kern, chief economist at the British Chambers of Commerce said:
Inflation is a longer-term threat which must be dealt with by a credible exit strategy, but this can only be applied when the recession ends. In the near future we urge the Bank of England to increase the scale of quantitative easing well beyond £125 billion.
The RPI, which includes housing costs such as mortgage interest repayments, fell by 0.5% to a record deflationary low of -1.6%.
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The RPI figurs are as follows for 09
June 213.4
May 212.8
Apr 211.5
Mar 211.3
Feb 211.4
Jan 210.1
Inflation is therefore increasing consistently. The use of the 12 month change is greatly misleading and it is of concern that the media uses the -1.6% figure when the shorter time figures are more important for predictions
Thanks Michael for the feedback and the RPI data.
Interestingly it’s the Office of National Statistics who focus their own press releases on the -1.6% figure, stressing that the % changes is its lowest since records began in 1948.
It’s not necessarily the media’s fault that these data are reported as they are.