Big Jump In Inflation And 'More To Come'

Discussion in 'Current Affairs' started by slim, Jun 17, 2008.

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  1. I particularly like the end sentence:

    "Mr King last wrote a letter to the Chancellor explaining why the cost of living had topped the 3% mark in March 2007."

    Now if the chancellor needs to be told by the BOE why he should not be in the job :thumright:

    Big Jump In Inflation And 'More To Come'

    The official rate of inflation has jumped to 3.3% - and the Bank of England has warned it could go above 4% by the end of the year.

    May's rate, well above April's level of 3%, was the highest since Labour came to power in 1997.

    It was driven up by soaring food and fuel prices, with crude oil touching $140 a barrel, a massive 40% rise since January.

    It meant the BoE Governor Mervyn King had to write to Chancellor Alistair Darling explaining why the increase in the cost of living is so far over the Government's target of 2%.

    In his letter, Mr King warned inflation would peak above 4% by the end of 2008 because of rising energy and food bills.

    He said it would then fall but would still remain above the 2% target well into 2009.

    He admitted it was "uncertain" where interest rates - currently at 5% - would go now.

    In response, Mr Darling agreed the rise in inflation would be temporary and said the Government would support the BoE's "forward-looking decisions".

    Among the biggest rises in the Consumer Price Index were fuel and lubricants which went up 4% in May.

    Food and non-alcoholic beverages rose by 1.7%.

    Mr King's letter is only the second of its kind since the Bank was granted independence in 1997 but he said it was likely to be the first in a series over the coming months.

    Sky News business editor Michael Wilson said: "The official rate of inflation may have jumped to 3.3%, but most people will tell you that it feels a lot higher.

    "We should also bear in mind that the soaring wholesale food and fuel prices mean that the cost of living will keep on rising."

    Inflation has been on a steady climb since last August and jumped 0.5% in April to 3% - the biggest monthly rise for nearly six years.

    Surging gas and electricity bills, food prices and Budget tax hikes on alcohol and tobacco were blamed for the leap, which significantly reduced hopes of further interest rate cuts this year.

    Mr King last wrote a letter to the Chancellor explaining why the cost of living had topped the 3% mark in March 2007.
  2. Dear Alistair

    I'm sorry to have to report that inflation is up despite our combined efforts to exclude anything that is really important to the public in compiling the headline rate, like mortgage interest, rent, food prices and the like.

    It's all the pensioners' fault, fancy complaining that they have paid tax on the money earned before they paid their pensions contributions and that we then tax them again on the money we give them in pensions, out of the kindness of our hearts.

    Of course, we never had high inflation when Gordon was Chancellor, because he was clever (prudent?) enough to borrow our way out af any trouble. And he did flog all that extra gold, of course. What a blind(ing) Chancellor he was!

    Then those swindling bastards in the oil companies, who make no money out of selling petrol, caused a strike that seems to be causing more problems with the scum electorate who were daft enough to vote you lot in again. Granted, not many of them voted, but what about that democracy, eh, the best scam I've ever been involved in and I'm a banker!

    Yours ever

  3. Does this mean I will get a big jump in my pension when it becomes index linked at 55?? Then might be good time to get the fcuk out and live in the sun.
  4. My big worry over increased inflation is the reluctance of the Treasury to accept increased interest rates (albeit delegated to the Bank of England). Great news for the hordes of spend now and pay later for the chav/celebrity lifestyle but bad news for people who actually save for the future. If inflation is 4% and interest on savings is 6% (for argument), net interest on savings is only 2% (being simplistic)! Are savings really worth it these days? Think of all the means tested allowances they bar you from!

    It's a pity the wake up call wasn't made 6 or 7 years ago when it began to look rather obvious but inconvenient.

    4% ?
    FUEL 01-05-2008 87ppl diesel KY Jelly 125mg tube 99p
    FUEL 31-05-2008 £1.33ppl diesel KY Jelly 125mg tube £1.26p

    I reckon the calculator is FUBAR 4% on 87p would be about 91p so it is more like 50% increase to bring it to 1.33

    Jack McH
  6. Did the BOE charge the chancelor the standard £30 for the letter like what we get charged guv

    Jack McH
  7. Doesn't anyone else remember the good 'ol days when mortgage rates were ALWAYS in double figures and peaked at 17% !!!

    Buying a house meant making sacrifices and changing your lifestyle. It paid off eventually but it was hard graft going without.

    Oz inflation is ahead of UK so although my savings here do OK the value of my pension is reduced by the exchange rate (although I could make a bit on the side by borrowing in the UK at 7.9% and investing here at 8.25%).
  8. Inflation??..remember Black Wednesday and George Sorus ?

    George Soros, the Hungarian-born global financier is reputed to have made a $1bn profit at Britain's expense. He had borrowed heavily to bet that sterling would be devalued. Mr Soros showed the amounts of money that could be made by well capitalised, risk-taking traders.

    what is to stop some other greedy bastard from dropping this country into even deeper doo-da than we already are.
  9. Certain global speculators have bought a lot of future oil production 'on account' and thus hiked up the cost. I'd dearly love to see them catch a cold with prices falling owing to increased worldwide production and lower consumption but this is unlikely to happen while companies continue panic-buying.
  10. Sad but true.
  11. stirling. What Georgie played on was our being signed up to the EEC Currency "snake" (which I think was to soften us up for agreeing to the Euro). To remain in the required value bracket the Treasury had to throw money at the £GB. That's about the time we left that bloody silly arrangement.

    I was in Romania at the time and for several days afterwards, none of the Banks or money changers would touch Lira Sterlina. Only time in my life I've been glad to have Yankee Dorra!

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