More misery for consumers
If you think the cost of living is bad now, just wait: much more misery is in store. The ONS has today released (pdf) producer (as opposed to retail) prices showing 9.3% food inflation, the largest since records began in 1986. Import prices for food and drink are 14%, almost all of this due to the collapse in sterling (and no, Prime Minister, the plunging pound has nothing to do with American sub prime crisis). All this will take a while to filter into shops, where food is 6% up on last year now. But sooner or later – perhaps as early as Christmas – double-digit food price inflation will be with Britain again. Add this to the 45,000 expected home repossessions and the economic feel-bad factor has just begun.
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Richard Coulthard
May 12th, 2008 2:54pmI wouldn't normally leap to Brown's defence but aren't the markets just anticipating falling nominal rates as a result of a slowing economy? This in turn removes some support for the pound. We then get a bigger dose of import price rises as we import a higher proportion of the goods we consume relative to say the Americans.It seems to me there is a link in this case. Richard.