The inflation figures for the UK economy released on 18^th October 2011 for the year ending in September 2011 have confirmed the continuing upward trend.  The Retail Prices Index (RPI) measurement is now 5.6% pa (the highest since June 1991) and up from 5.2% in August.

The Consumers Prices Index (CPI) – which does not include mortgage payments – is the Government’s target measure.  It now stands at 5.2% pa (up 0.7% from August2011).  These figures are well above the Government’s 2.0% target. 

The main reasons for the hike in Inflation are higher energy and food bills. 

But these figures are not bad news for everyone as the annual September CPI figures are used by the Government for numerous increases, including rises to the basic state pension and the annual ISA allowance. 

The Basic State Pension will therefore increase from its current level of £102.65 to approximately £107.65 per week.  Hopefully, this £5.00 per week increase will at least take the sting out of energy and food prices for our retired/retiring population.  I guess it doesn’t help the budget deficit plan much though!