Wednesday, 15 September 2010

Inflation not falling

Yesterday the inflation numbers for August were out. CPI was 3.1%, same as the month before, and RPI was 4.7%, down from 4.8%. The unexpectedly high rate was boosted by strong rises in air fares, clothing and food while petrol was down a little, a litre typically costs £1.16 rather than £1.18.

Economists were expecting a sharper fall so sterling had a little boost due to the prospect of the base rate being increased to offset the inflation. That prospect has gone from "distant" to "still a long way off."

1 comment:

Sandpits Man said...

If I had missed my targets for 9 months in a row, and always blamed 'unexpected activity', then I would expect to be 'unexpectedly' unemployed.
The inflation is caused by the collapse in Sterling. Interest rates will have to increase to protect Sterling to avoid otherwise importing inflation as at present. The trouble is they fear rising mortgages will plunge the housing market in to a new crisis, and trigger a new wave of defaults and a new financial crisis. Tricky times.