Government welcomes static inflation rate
The Bank of England’s key monetary remit is to maintain the UK’s inflation rate at 2%. This is the figure set by parliament at which sustainable growth can flourish.
But despite this target, UK inflation, as judged by the consumer prices index (CPI) is not performing the way the bank or the government would like.
Today the UK inflation rate fell back to zero, down from July’s rate of 0.1%, and the CPI rate has been almost completely flat for the past seven months.
According to economists this is due to falling oil prices and lower food costs, but a wet summer that kept shoppers off the high street.
The BoE’s own website says that “inflation below the target of 2% is judged to be just as bad as inflation above the target”, yet the Treasury has welcomed the figures.
A spokesperson said: “Today’s inflation figure means a real boost for working people and family budgets across our one nation, with prices essentially frozen compared to last year while wages continue to rise.
“This is a reminder that we must continue to work through our long term plan to build a resilient economy – delivering the economic security of a country that lives within its means, financial security of lower taxes and a new National Living Wage, as well as national security of a Britain that defends itself and its values.”