Why we need a rate rise

Now that today’s inflation figures are up, to a predictable and predicted 4.0 percent on CPI and 5.2 percent on RPI, we can expect the usual response. Nothing from the government (even though the declining standard of living will eclipse cuts as the no.1 problem of 2011); plenty of shocked news stories; and, then, the round of commentators saying that Mervyn King should “hold his nerve,” and not increase the absurdly low base rates of 0.5 percent. Inflation is temporary, he says, and should be okay again this time next year (that’s what he said about the start of 2011). The Spectator does not have much company in finding fault with King and calling for a rate rise. So here’s my case:

1. Britain has the worst inflation in the Western world, apart from Greece. Yes, the world is facing an inflationary spike. But the world is coping far better than Britain.