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UK annual CPI eases, first negative RPI in 50 years

Published 04/21/2009, 04:34 AM
Updated 04/21/2009, 04:40 AM

LONDON, April 21 (Reuters) - British annual consumer price inflation eased to a one-year low in March, while retail price inflation turned negative for the first time in nearly 50 years, official data showed on Tuesday.

The Office for National Statistics said consumer prices rose by 0.2 percent in March, taking the annual rate down to 2.9 percent from 3.2 percent in February.

Retail price inflation, used as a benchmark for many wage deals, was flat on the month and fell to -0.4 percent year-on-year, the first negative annual reading since March 1960.

The figures were broadly in line with consensus and support the Bank of England's view that inflationary pressures, which have proved surprisingly resilient in recent months, will subside over the course of the year.

The main downward effects on consumer prices last month came from household costs, particularly a fall in gas bills. Food and drink also exerted some downward pressure, as did transport costs as petrol prices rose less steeply than last year.

The biggest downward impact on the RPI measure came from falling house prices and lower mortgage costs following the Bank of England's recent interest rate cuts.

The central bank cut interest rates to a record low of 0.5 percent in March.

The housing component of the RPI index fell 10.3 percent on the year, the biggest fall since the series began in June 1948.

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