Inflation the highest it has been since 1992
James Forsyth 8:56am
Last week, the Bank of England held interest rates at 5 percent because inflation, as measured by the Consumer Price Index, was 3.3 percent—above the Bank’s 2 percent target. Today’s Daily Mirror reports that the CPI will rise to 3.6 percent—the highest it has been since 1992—when new figures are announced on Tuesday. The Mirror also claims that its own Cost of Living Index shows that the ‘real rate’ of inflation is 18.53 percent.
One can question the economic accuracy of the Mirror’s number. But there’s no doubt that the rise in prices has been dramatic. The Mirror notes a 30 percent rise in fuel costs, a 14 percent increase in food prices with bacon up an incredible 43 percent and a 4.3 percent rise in household bills.
With inflation returning as a problem, the Bank is almost certain not to cut interest rates, removing one possible way to kick-start the economy. The real test of Bank of England independence will come over the next few months as politicians begin to call for rate cuts while the Bank—aware of its inflation target—insits on holding them steady.
PS You can work out your own personal inflation rate using this neat tool.
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Comments
Omnia mutantur
July 14th, 2008 9:22amIf you want a useful measure of inflation, try studying the prices of Muller 'Corner' yoghurts. They are now 60p each where this time last year you could pick them up for 30p.
John
July 14th, 2008 9:57amIs this not called stagflation?
Ian C
July 14th, 2008 10:04amInflation is more like 8-10%. The Govet manipulated CPI says 3.3% but this excludes the major items most households cannot avoid paying - Council Tax and mortgages or rent. Not to mention average house prices i.e. the average loand size required to buy the average house. Interest rates should be positive to squeeze inflation, but most of it is as a result of government policies and some of it from food and oil prices. You see little analysis of this in the press.
Interest rates were targeted by theso called 'independent' Bank of England on a false rate of inflation per the above. Even 'freeing' the Bank of England was a Brown smoke and mirrors act because he made the rules up for defing the calculation of inflation. So he set inflation to exclude the most important items so interest were way too low.
It is not surpising that on Newsnight last week even the BBC were saying that his one policy success of liberating the BoE was coming back to bite him. Bite him it should. The man is liar and a disaster for this country and he has conned alot of people. They are waking up now - too late.
TrevorH
July 14th, 2008 10:15am'his one policy success' .... his one alleged policy success.
Alleged by the likes of the BBC
AlanofEngland
July 14th, 2008 10:31amFood vouchers and soup kitchens for the poor and elderly will be next...just wait until winter when they have to choose yet again to heat or eat...MPs will of course be immune from it.
Trumpeter Lanfried
July 14th, 2008 12:00pmAny day now Brown will 're-define the Bank of England's role' i.e. move the goalposts.
Derah Yasque
July 14th, 2008 6:43pmIs inflation such an evil?
In '76 we were in the mid 20s% and we didn't have the sense of gloom and despondency which pervades the country at present.
Min'st you it was lovely and sunny all summer.
Robert Williams
July 14th, 2008 7:02pm"Any day now Brown will 're-define the Bank of England's role' i.e. move the goalposts."
No need, if he continues with his denial & lies about the level of inflation, as evidenced by his PMQ response to Ann McIntosh - see Brownie #1
http://www.spectator.co.uk/coffeehouse/543326/brownie-no1-inflation.thtml
Tina
July 14th, 2008 7:47pmSir John Major said on Marr that Brown has changed the way inflation is calculated. He said that if inflation was calculated in the same way as when he was Prime Minister, it would be more like 8-10%. Brown and more of his lies and spin.