Inflation Report 1993 Q4

Quarterly Bulletin 1993 Q4
Published on 01 December 1993

The Inflation Report considers recent developments in inflation and puts forward the Bank of England's analysis of future prospects. It contains seven sections covering:

(i) recent price developments;
(ii) monetary and fiscal policy;
(iii) demand and output;
(iv) the labour market;
(v) price dynamics;
(vi) the prospects for inflation; and
(vii) conclusions.

Underlying inflation-defined as the twelve-month change in the Retail Prices Index excluding mortgage interest payments (RPIX)-has risen since the last Inflation Report. It was 2.8% in June, but has i ncreased in each of the last three months, to reach 3.3% i n September. The headline rate of inflation has also risen.

RPIX inflation has been affected by the switch from the Community Charge to the Council Tax. To disentangle the impact of such tax changes on the price level from the 'underlying' rate of inflation, it is useful to examine a price index which excludes not only mortgage interest payments but also indirect taxes and local authority taxes. Inflation measured in this way rose from 2.8% in June to 3.5% in September, the same as a year ago before sterling's depreciation began to affect import prices.

Some increase in inflation between June and September had seemed likely at the time of the last Report. Sales discounts were unusually widespread in June, suggesting that a rise in the inflation rate would follow post-sale price rises. In addi tion, seasonal food prices fell by more than is usual in June.

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