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    Sales See Inflation Fall To 4.2% In December

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    UK inflation dropped sharply in December, with the biggest one-month fall in the consumer prices index (CPI (Berlin: CEJ.BE - news) ) since April 2009.

    CPI fell to 4.2%, from 4.8% in November (Stuttgart: A0Z24E - news) , according to the Office for National Statistics. This was in line with expectations.

    It is now at the lowest level since June last year, with CPI reaching a three-year peak of 5.2% in September.

    Inflation also fell in the eurozone - from 3% in November to 2.7% in December.

    Michael Saunders, chief European economist at Citigroup (NYSE: C - news) , told Sky News he expects UK consumer inflation to continue to drop, reaching 2% by the end of the year. 

    In Britain, the retail prices index (RPI), which includes housing costs, also dropped, from 5.2% to 4.8%. The fall was slightly less than the 4.7% forecasted.

    The falls were prompted by heavy retail discounting, particularly on clothing, and a supermarket price war in the run-up to Christmas. Many of the promotions began earlier than usual.

    Falling gas and petrol also contributed to the drop, announced on Tuesday.

    The fall in the rate of inflation is likely to reinforce arguments in favour of holding interest rates at historic lows of 0.5%, with some predicting they will be held there until 2016.

    Earlier this month, the British Retail Consortium (BRC) said shop price inflation fell to 1.7% in December - down from 2% in November - its lowest level for 16 months.

    The rate of inflation for non-food items was at a two year low of 0.3%, and significantly down on 0.8% in the previous month.

    This was driven by price cuts on electrical items, clothes and footwear, with many items cheaper than they were a year ago.

    However, the BRC said food prices rose 4.2%, which was slightly higher than November's 4% increase, despite the high level of supermarket discounts.

    A supermarket price war broke out after Tesco (LSE: TSCO.L - news) announced a £500m price-cutting campaign, Asda (NYSE: WMT - news) guaranteed to be 10% cheaper than its rivals and Sainsbury (LSE: SBRY.L - news) 's launched its own brand price matching scheme.

     

    24 comments

    • Wills  •  London, England  •  3 months ago
      The economy grew very slightly in the last quarter of 2011 ,and yet the boy scribblers from Sky Murdoch News continue to talk the UK down by insisting we are already in recession. What hidden agenda are Murdoch News pursuing in their continuous drip feed of bad news?.
    • ALAN  •  4 months ago
      DO NOT BUY A PROPERTY ANYWHERE IN CYPRUS WITHOUT A TITLE DEED AVAILABLE AT POINT OF PURCHASE UNLESS YOU WANT TO LOSE ALL OF YOUR MONEY AND PROBABLY YOUR HEALTH. --- YOU HAVE BEEN WARNED!
      • Hells Bells! 4 months ago
        Beware of Greeks beaing gifts is an old saying. Had the same in Spain its seems med countries are not to be trusted. My husband and I lost alot of money through the corruption of local mayor and laws that are so archaic in Spain. When I lived in Cyprus (posted there via the armed services) in the early 70's corruption over land buying was rife and again peculier measurements of land etc. Had some friends who lost out on land deals etc. It seems things have not changed. It sound Alan that you have suffered a financial loss. If so my heart goes out to you. The stress of what happened to us in Spain I think contributed to my husbands death there. Give me my own country anytime for all its faults. Britain is still the best country in the world. Thats why all and sundry want to come here.
    • John  •  London, England  •  4 months ago
      All the inflation figures given are 100% true, they must be your government provided them. Nothing to see here please go back to sleep people.
    • Joe  •  3 months ago
      Only because the consumer has been bled dry and has no money left to spend.
    • Joe  •  3 months ago
      Too late the damage has been done.This will do nothing to help the poverty in the UK.
    • phillip  •  4 months ago
      See what happens when people hold back on spending just for the sake of it, the shops drop their prices and price wars begin, which is good for us the consumer, we the people ultimately do have the power .........we just need to find a way of using it collectively more often ..........energy firms next......ok everyone on the count of three switch your tv's and computers and lights OFF.........one .............two ......................three
    • johnnie  •  Grantham, England  •  4 months ago
      Asda were selling 6oog of cheese but when you looked at the packet there was only 550g in it.
      • opinion 1 4 months ago
        take it to your local council trading standards
    • Jake24  •  Yeovil, England  •  4 months ago
      Perhaps the people that come up with these figures should begin to realise, that although inflation 'may' have gone down, the real cost of living hasn't! Rather than buying new clothes, shoes or a new television I'd prefer the supermarkets stopped their so called 'promotions' and instead gave us real price drops. They tend to raise items to a certain price, after a while lower that price, whilst still maintaining the cost above the initial price! My experience in visiting various supermarkets have shown very little real reductions in costs. I'm more concerned with the inflated prices of food and energy rather than a total that encompasses inflation on many goods that are not necessities. Plain Honest English Please!
      • Pete C 4 months ago
        Totally agree Jake. I too see the 1/2 price, 30% off, buy 2 for the price of 1 deals to know that the prices often refer to a price never seen in that shop
      • bobbathejobba 4 months ago
        Legally they have to have had the previous price for 28 days I believe.
    • JOHN  •  Milton Keynes, England  •  4 months ago
      shop local and only buy what you need not in supermarkets
    • David  •  London, England  •  4 months ago
      Figures may be right but a drop in inflation fueled by selling stuff off cheaply is not a good sign.
    • graham  •  Manchester, England  •  4 months ago
      WHO IN THEIR RIGHT MIND BELIEVES INFLATION IS ONLY 4.8% ? ;LIES DAMNED LIES AND STATISTICS !!
      • BRENDEN 4 months ago
        Grow up
      • NHS Worker - Manchester. 3 months ago
        Your right Graham, my experience on the High Street tells me a different story than that peddled by the Government.
    • JULIANzzz  •  London, England  •  4 months ago
      Clear evidence of price fixing! If the supermarkets can find savings of this order now, why were prices escalating before? I note that Tesco's halving of Clubcard points freed £750,000 which means that £1.5 billion has been circulated into this customer confusing Ponzi scheme. It looks as if the corporate monsters were deliberately putting up prices so that as the cuts bit, they would have more fat to cut.
      • stuart w 3 months ago
        Because these so-called savings are charged to the supermarket's suppliers, not from of their own profit margins. The supermarkets naively assume their customers will believe the propaganda.
    • Carl  •  4 months ago
      More nonsense churned out by the pathetic media, it is obvious to anyone with their eyes open that inflation is MUCH higher. It shows the level of manipulation evident here, this article is clearly fiction
    • kean  •  Birmingham, England  •  4 months ago
      Westminster cooks are at it again!
    • robiniag  •  Chelmsford, England  •  4 months ago
      inflation falls? hahahahahahahahaha yeah right!!!!
    • PatSyCola -  •  Brighton, England  •  4 months ago
      4.2% SURELY a misquote ? move the deciminal point because in the real world where Osborne and Cameron do NOT have to live then 42% is nearer the true figure...
    • hmmmmm  •  Milton Keynes, England  •  3 months ago
      good, does that mean interest rates can up now?
    • hmmmmm  •  Milton Keynes, England  •  3 months ago
      hmmm, must be the drop in price of moats and chandeliers making the difference.
    • Koh-i-Noor  •  4 months ago
      Thankfully we have a Conservative government in office once again. 18-months and already the results are storming through. Can't understand why any working person would ever vote for the other crowd. Mind you, maybe that's the clue, eh?
    • Leslie  •  Surbiton, England  •  4 months ago
      I have my doubts about the figures, as the ONS has time and again shown that they get revised upwards in time.