And Brown gives us inflation…

April 21st, 2010

The consequences of the Government’s ‘quantitative easing’ policy have been revealed this week as the UK inflation rate rose to 3.4% in March.

The rise in the Consumer Price Index (CPI) inflation rate was bigger than analysts had been expecting and the Retail Price Index (RPI), which includes housing costs, similarly rose sharply in March.

Higher petrol prices were one important factor in rising consumer prices according to the Office for National Statistics (ONS). Petrol prices increased because of the relative weakness of the pound and higher refining costs, as well as the increasing price of oil.

It is thought that the rise in VAT, which went back up to 17.5% in January also contributed to the spike in inflation.

The ONS said increasing air fares, especially on European flights, rising food and non-alcoholic drinks prices, and higher clothing and footwear costs also played a part.

Despite the sharp rise in prices, some analysts believe the rate of inflation will fall again in the coming months as weak economic growth and high unemployment soften price rises.

The Bank of England (BoE) is expected to keep interest rates low as part of the plan to stimulate growth as the economy recovers from the recession.

UK interest rates have been at a record low of 0.5% for over a year. The policy is thought to have helped bring the UK economy out of recession in the last quarter of 2009, when it grew by a somewhat measly 0.4%.

However, if prices continue to rise sharply, the Bank’s Monetary Policy Committee (MPC) may have to raise rates anyway in order to stop inflation getting out of hand and wrecking the nascent recovery.

For me this should be the final nail in the political coffin of Gordon Brown. The ONS is unlikely to turn on its master, yet, but it’s clear from reading between the lines that the underlying cause of the inflationary pressure is Brown’s policy of, in effect, printing money.

Through a spiralling burden of debt, both public and private, Brown made the people of the UK think they were living in times of prosperity for the past 13 years. Now the bubble has burst and we are left with a culture of debt that will be around the collective neck of the country for at least a generation and enormous, unsustainable Government spending which needs to be cut when, had we been better prepared, we could be increasing it.

This entry was posted on Wednesday, April 21st, 2010 at 4:18 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

And Brown gives us inflation…

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