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UK inflation moves higher

The rates of inflation in the UK, according to the consumer price index, increased to 3.7% last month from 3.4% in March. It is believed the rise was fuel led by an increase in excise duty as well as price rises in food and women's clothing in particular. However, the situation looks even worse if you look at the retail price index, which many companies prefer to use, with this particular index increasing from 4.4% in March to 5.3% in April. This is the biggest monthly rise since 1991 and while there are some extenuating circumstances there may be trouble ahead for the UK government and the Bank of England.

Even though inflation would appear to be second in the list behind the performance of the economy for the UK government and the Bank of England, there is still a need to ensure that it does not race away out of control. Inflation effectively eats into the value of money and this would be something that could impact very heavily upon savers in the UK with interest rates well below the 3.7% rate of inflation.

It will be interesting to see how the Bank of England responds to this increase in both core inflation and the wider inflationary figure.

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