According to figures just published by The Office for National Statistics, the old style Retail Price Index (RPI) has hit 4.4%, its highest level since 1991. (Including mortgage repayments).
Also the Consumer Price Index has hit 3%, it's highest since it was introduced. It excludes mortgage repayments.
Whilst a lot of the increase could well be down to fuel costs, which is not primarily the governments fault, there are other causes for concern such as the ever increasing cost of housing, and how it is moving firmly out of the reach of first time buyers.
If you want to calculate your own personal inflation rate you can use the Office for National Statistics personal calculator here.
Not good news for Gordon then. It also explains the interest rate hike last week which caught the city by surprise. Expect interest rates to rise again by at least another quarter of a percent within the next two months. Some think it will hit 6% by the end of the year. Not good news for the economy at all, and not good news for Gordon Brown.
The BBC has this story here.
Update 11:55
I forgot to mention that according to today's Telegraph here, banks and building societies are withdrawing fixed interest rate mortgages. There is lots of speculation as to why, but one very firm reason has to be that they think interest rates will rise again and soon.
Also the Telegraph has this on the rise in inflation.
Update 13:23
The Evening Standard also has this, claiming RPI is the highest in 16 years, and this on banks ceasing fixed rate mortgages.
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4 comments:
There are increasingly worrying signs that we are heading for stagflation in the UK.
Inflation is continuing to rise while the economy (based in large part on consumer and Govt. spending)is likely to start shrinking this year.
Over-indebted homeowners are having problems paying their huge debts and this will clearly be exacerbated by the rising interest rates needed to tackle inflation.
The house price bubble is likely to burst this year leaving economic chaos in it's wake.
Brown and his friends on the Bank of England's MPC have a lot to answer for.
Anonymous, yes we could well be heading for stormy waters.
When house prices rise well ahead of wages for years and years, you know there is going to be trouble at some point. The only questions are how much, how long and how painful.
On top of that much recent growth has been funded by debt both public and private.
Stagflation under a Labour Government!?! Who'd have thought!?!
At least the recession will occur on Labour's watch, they will be condemned to another twenty years or so in the political wilderness as Gordon's claims of "no return to boom and bust" come back to haunt him. With a record ten years in office as Chancellor, he will have no one else to blame...
Yes, Snafu, if there is a recession even if Gordon is PM, he will still get the blame.
I don't think things are quite taht bad yet, but the boat is rocking.
Stagflation would be very bad news.
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