Inflation unlikely to affect HSBC personal loans

Inflation nudged up to 1.2 per cent in October but is unlikely to budge interest rates, meaning that personal loan rates could remain the same.

The Office of National Statistics noted a two pence increase in petrol, to a four-year high of 85 pence a litre, which accounts for 80 per cent of the inflationary jump.

Analysts across the board, however, do not see this as having any likely influence on the Bank of England, which is predicted to maintain the interest rate at 4.75 per cent.

John Butler of HSBC personal loans told The Times: "Despite the rise, inflation remains incredibly low, with UK inflation lower than almost all other EU economies."

His colleague, Melanie Baker of Morgan Stanley, added: "Inflation remains significantly below target in the UK and we continue to think that, on balance, interest rates are likely to remain on hold through 2005."

The inflation figure is that calculated using the consumer price index which is favoured by the Government.

Using the retail prices index, which includes the housing market, inflation is at a four-year high of 3.3 per cent due to high house prices.

The gap between the CPI and RPI indices is the biggest since September 2000.