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Rising Petrol Prices Drive Up Inflation in Britain

Posted on: Wednesday, 14 September 2005, 09:00 CDT

Rising petrol prices drive up inflation in Britain

LONDON, Sept. 13 (Xinhua) -- Britain's consumer price index (CPI) inflation rose to 2.4 percent in August from 2.3 percent in July fueled by rising oil prices, figures from the Office for National Statistics (ONS) show.

Crude prices drove fuel higher, taking CPI to its highest level since records began eight years ago, the British Broadcasting Corporation (BBC) reported on Tuesday.

The average cost of a litre of petrol went up by around 3 pence in August, the ONS said, adding petrol prices fuelled the rise in CPI, contributing nearly 0.08 percentage points to the annual CPI rate.

It was the second consecutive month that petrol prices had driven inflation higher than the 2 percent target set by the government.

Food prices also had an upward impact, as did clothing and footwear as their price comebacks after the summer sales were greater than a year ago.

Headline retail price inflation (RPI), which includes housing costs, fell from 2.9 percent to 2.8 percent year-on-year, whereas the underlying rate of RPI fell to 2.3 percent from 2.4 percent in July.

"The increase in inflation in August was primarily due to higher prices for fuel and some food items, while core consumer inflation actually edged back down to 1.7 percent after spiking up to 1.8 percent in July from 1.5 percent in June," said economist Howard Archer, at Global Insight.

Despite the rise in CPI, analysts believe there may still be room for the Bank of England to cut interest rates from their current 4.5 percent level.

Source: Xinhua News Agency - CEIS

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