Video game price increases hike inflation in UK

The rising cost of computer games in the run-up to Christmas helped to push up British inflation during October, official data showed on Tuesday [18 November 2014].

The 12-month Consumer Price Index (CPI) rate accelerated to 1.3 percent in October from a five-year low of 1.2 percent in September, the Office for National Statistics (ONS) said in a statement.

“Smaller falls in transport costs than a year ago — notably for motor fuels and air fares — and price rises for computer games were the main contributors to the rise in the rate of inflation,” the ONS said.

Analyst expectations had been for the annual rate to remain at 1.2 percent in October, according to a survey by Dow Jones Newswires.

The statistics office added that the October rate would have been 0.3 percentage points higher, had it not been for falling food and petrol prices.

“Consumer price inflation edged up in October primarily because petrol prices fell even more in October 2013 than they did this October,” said economist Howard Archer at the IHS Global Insight consultancy.

“There was also a rise in the price for some computer games.”

He added: “They were specifically highlighted by the ONS as having some upward impact due to a number of new titles being released in the run-up to Christmas and replacing cheaper titles in the computer games charts.”

Meanwhile last week, the Bank of England forecast that it expected the 12-month CPI rate to drop below 1.0 percent during the next six months.

The central bank also trimmed Britain’s economic growth and inflation forecasts, indicating a long wait for a rise in interest rates.

Gross domestic product, or economic output, is now forecast to expand 2.9 percent next year, down from a previous estimate of 3.0 percent owing to economic strains in the neighbouring eurozone.

Analysts said the central bank was unlikely to raise its record-low interest rate of 0.50 percent until late 2015.

The BoE’s main task is to use monetary policy as a tool to keep annual inflation close to a government-set target of 2.0 percent.

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Video game price increases hike inflation in UK