The UK’s annual rate of inflation surges
August 10, 2008
The UK’s annual rate of inflation reached 4.4 per cent in the last month (July), its highest level since records started in 1997. The 0.6 per cent rise was the biggest monthly change ever and took the figure to almost twice the government’s target. The increase in the Consumer Prices Index (CPI) was also more than expected. Food prices went up a record 13.7 per cent on the year.
Inflation, as calculated on basis of the Retail Prices Index (RPI), rose to 5 per cent from 4.6 per cent. The latest figures are bound to make the interest rate decision by the Monetary Policy Committee of the Bank of England even tougher, with the bank now having to cope with inflation and a slowing economy. Philip Shaw, the Investec chief economist, stated: “It is very disappointing data showing widespread signs of higher price pressures.”
Many economists expect the rates to be cut by next year if the British economy goes into a tailspin. Figures released suggested that the summer sales had little effect on reviving retail sales. Mortgage approvals and House prices continued to tumble.
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