Inflation Hits 4.4 Per Cent
13/08/2008
UK inflation is now more than double the Government's target, having hit 4.4% in July. This breaks two records: it is both the biggest monthly change since records began in 1997 (0.6%), and the highest level overall.
Although worrying, the rise in the Consumer Prices Index is not surprising, given the astonishing 13.7% increase in food prices over the last year.
Inflation according to the Retail Prices Index (RPI) - often used in pay negotiations - is even higher, at 5%.
The current rate of inflation is likely to present a tough decision to the Bank of England, when it comes to making the next decision on interest rates. Many economists predict that rates will have to be cut by 2009 if the economy heads into a recession.
Liberal Democrats, Treasury spokesman Vince Cable said: "It's very clear that we're in for a dose of stagflation, with the economy slowing abruptly and inflation too high and increasing."
However, Yvette Cooper, the Chief Secretary of the Treasury, said that inflation was a problem everywhere because of high oil prices and a lack of supply.
Although worrying, the rise in the Consumer Prices Index is not surprising, given the astonishing 13.7% increase in food prices over the last year.
Inflation according to the Retail Prices Index (RPI) - often used in pay negotiations - is even higher, at 5%.
The current rate of inflation is likely to present a tough decision to the Bank of England, when it comes to making the next decision on interest rates. Many economists predict that rates will have to be cut by 2009 if the economy heads into a recession.
Liberal Democrats, Treasury spokesman Vince Cable said: "It's very clear that we're in for a dose of stagflation, with the economy slowing abruptly and inflation too high and increasing."
However, Yvette Cooper, the Chief Secretary of the Treasury, said that inflation was a problem everywhere because of high oil prices and a lack of supply.
