Tuesday, January 20, 2009
VAT and mortgage costs down
Consumer price inflation fell sharply in December to an annual rate of 3.1% from November's figure of 4.1%. The change was due to falling petrol prices and the reduction in VAT from 17.5% to 15% that was announced in the pre-Budget report on 24 November. The headline rate of inflation measured by the Retail Prices Index (RPI) fell to 0.9% from November's rate of 3%. RPI takes account of mortgage costs, which also fell following December's cut in interest rates.