Inflation has decline during the month of January as the effect of 2011’s value added tax increase was not revealed in the reports.
The Consumer Prices Index measure of inflation in the United Kingdom has declined to 3.6 percent during the month of January, which is a big jump from its previous record of 4.2 percent in December, according to the report released by the Office for National Statistics.
The Retail Prices Index inflation declined to 3.9 percent from its previous record of 4.8 percent. The RPI includes mortgage interest payments.
Value added tax increased from 17.5 percent to 20 percent which in effect also affected annual inflation rates.
According to the UK Prime Minister David Cameron, “Inflation is coming down and that is good news, as the cost of living is the most important issue facing families up and down the country.”
The Labour Party have expressed their opinion on the matter saying that the prices are still very high.
“For ordinary families right up and down throughout the country, the fact is prices went up last year, they’ve stayed up… and incomes of course haven’t risen at all,” according to Owen Smith who is the shadow treasury minister.
According to the most recent report from the Office for National Statistics, the pay is increasing at the rate of 1.9 percent.
“Although inflation is now falling broadly as expected, the process of rebalancing still has a long way to go. Growth remains weak and unemployment is high,” said Sir Mervyn King, governor of the Bank of England.
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