Inflation Reduction Confounds Pundits
Byline: Nevill Boyd Maunsell Economics Editor
Inflation eased last month, wrong-footing numerous economists who had confidently predicted an increase as a prelude to higher interest rates from the Bank of England early next month.
Both the new, European-style consumer prices index chosen by Chancellor Gordon Brown last December to be the basis for a two per cent inflation target and the old measure, included home-ownership costs other than mortgage interest, eased back year on year - to 1.1 per cent and 2.1 per cent respectively.
Only the headline retail prices index, watched closely by pay bargainers and still used as the basis for most state benefits, showed prices rising faster.
According to National Statistics, the CPI rose by a meagre 0.18 per cent between February and March, pushing the annual rate of inflation down to 1.1 per cent, the lowest rate since June last year, from 1.3 per cent in February and 1.4 per cent in January.
At the same time, the RPI - but not counting mortgages - interest rose by 0.27 per cent last month pushing the annual inflation down to 2. …