Labour Research April 2002

Key economic indicators

Inflation back below target

The headline rate of inflation fell back to 1.0% in February from 1.3% the previous month.

The underlying inflation rate, excluding mortgage interest payments, also fell to 2.2% and is once again below the Treasury's target of 2.5%.

Ten of the 14 groups that make up the headline rate increased by more than 1.0%. They included leisure services, where a 16% rise in TV licences and rentals contributed to a 6.7% rise in leisure services. A 6% rise in the cost of canteen meals led to a 4.1% rise in the catering group.

Meanwhile a 24% cut in mortgage interest payments meant the housing group showed a 1.4% fall.

The February inflation figures reflect the annual changes made to the basket of goods that make up the Retail Price Index. Changing consumer tastes means that included for the first time are prawns, chilled reduced-calorie and frozen vegetarian meals and a range of ethnic take-away meals. Meanwhile out of the basket goes tinned salmon, powdered skimmed milk, loose tea and red potatoes. Pipe tobacco is also dropped.

As more is being spent on electronic leisure goods and leisure activities, the RPI now includes DVD players, recordable CD-Rs, disposable cameras and football.

But out go darts, personal cassette players and blank and pre-recorded audio cassettes.