Tuesday, April 17, 2007

Inflation rise forces explanation

The cost of living has risen at its fastest rate for at least 10 years, forcing the Governor of the Bank of England to write a letter of explanation to the Chancellor for the first time.
The Consumer Prices Index (CPI), the official measure of inflation, rose to 3.1% last month, more than 1% above the Government's target for inflation.
Governor Mervyn King has to write an open letter to Gordon Brown if CPI hits more than 1% above or below the 2% target.
Tuesday's figures from the Office for National Statistics (ONS) are higher than expected by the market and will reinforce fears of a further interest rate rise by the Bank of England next month.
The Bank's Monetary Policy Committee was widely expected to raise rates in April and economists have said borrowers were given a narrow reprieve when the bank base rate was kept on hold at 5.25%.
The rate of inflation measured by CPI has not been as high as 3.1% since records began in 1997.
The data from the ONS also showed that the Retail Prices Index (RPI), which is often seen as a more representative measure of inflation as it includes housing costs, rose by 4.8%, up from 4.6% in February - a 15-year record high.
The ONS said the CPI rate of inflation was driven up largely by the rising cost of food and non-alcoholic drinks, with milk prices soaring by more than 2% in March compared with a fall of 8% last year.
Higher petrol prices also put upward pressure on the cost of living, rising by 2.5p per litre in March as crude oil prices increased to around 64 US dollars a barrel.
The RPI, meanwhile, was pushed up by higher prices of household goods and furniture, in particular electrical appliances.
So Much For Comrade Gordon Stalin Brownface being an economic genius!

No comments: