15 Oct 2008

UK inflation reaches 5.2%

9:11 am on 15 October 2008

Inflation in Britain hit a 16-year high of 5.2% in September, with energy bills behind much of the rise.

The Consumer Prices Index was up from 4.7% in August. However, inflation is tipped to slow as a result of lower oil prices and reduced demand in a slowing economy.

September's Retail Prices Index figure - used to work out benefits and state pensions for the coming year - rose to 5% from 4.8% a month earlier.

The BBC reports the recent economic downturn has seen recession replace inflation as the key risk to the UK economy.

Last week, the Bank of England cut interest rates to 4.5% from 5% in a co-ordinated worldwide move. The Bank added that the risks of inflation had moved "decisively" to the downside.

Increased food and energy prices this year have been blamed for taking inflation beyond the government's target of 2%. The Bank predicts it will remain above that level until well into next year.

The Office for National Statistics said the annual rate of inflation for energy and other household bills reached 15% - the highest since 1989. More expensive clothing, footwear, toys and games also added to the cost of living.

Food inflation slowed for the first time since March as the price of milk held steady, but the cost of meat continued to climb.