Member Article

Inflation falls to 3.6%

Inflation levels in January fell to 3.6%, down from 4.2% in December 2011.

Downward pressures came predominantly from fuels & lubricants, tobacco, the purchase of new vehicles and alcoholic beverages.

Annual inflation has now falled by 1.2% since November, the largest fall over a period of 2 consecutive months since October and December 2008.

This figure has come as no surprise to John Dance at Veterm Asset Management. He commented:

“Today’s number appears to be in line with most City estimates, January was the first month to benefit from no VAT increases as had been a major contributor over the last 12 months to headline figures, and we expect further declines over the forthcoming months, predominantly as the impact of Oil price spikes a result of the Arab spring unwind.”

Director of Policy at the NECC Andrew Sudgen believes that inflation will continue to fall over the coming months, but believes that further measures are needed to boost the economy.

He said: “This fall will hopefully reduce the pressures businesses are facing in the current economic climate and encourage more consumer spending to rise.

“I think the time is right for the Government to introduce more dynamic measures to help grow the economy.

“The government must announce a substantive credit-easing plan as soon as possible to improve the flow of lending to businesses.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .