Is it just a blip

  Grey Goo 12:06 19 Jan 10
Locked

Inflation for December up to 2.9%.

  OTT_B 12:39 19 Jan 10

However January inflation from this year will also be high since the rate if VAT returned to 17.5%.

  peter99co 13:36 19 Jan 10

Alister will have a solution won't he? Or will Mervyn King have to fix it?

  Flak999 16:00 19 Jan 10

Standby for a rise in interest rates!

  johndrew 16:05 19 Jan 10

This could be the start of something interesting and maybe a bit concerning.

We are still in recession with very low interest rates and the BoE has been printing money to boost the economy. Additionally we have been selling off our gold, property and businesses and permitting our manufacturing industries to die or go overseas whilst relying on a consumer led economy.

Whether an exactly similar situation has existed in the world before I`m not quite certain. But it is fairly obvious the value of sterling is not what it was so our imports - and we now rely on these more than before - will be more expensive. Perhaps inflation will be kept under control; I hope so, we can ill afford to go the way of Zimbabwe or Germany in the 1930s.

  OTT_B 16:20 19 Jan 10

I don't think this is the beginning of the end. Not yet anyway.

Keep in mind that a lot of last year was spent in negative inflation, so a 2.9% rise in December as the economy is supposed to be lifting out of a very deep recession is to be expected. I can see January inflation being similar or possibly a little higer.

One of the biggest risks at the moment is the impending General Election. It may turn out that large companies are holding off on any investment in the UK until after May (or whenever the election will be). That could cause several months of supressed economic activity which in turn could force the UK to remain in recession.


Flak999: I can't see any interest rate rises in the next 6 months. That will boost inflation figures even further.

  interzone55 17:18 19 Jan 10

"Standby for a rise in interest rates!"

Whooppee!!! I'll be debt free next month and I'll start earning some interest on my savings....

  Flak999 17:36 19 Jan 10

Well, inflation in one jump is already over the Governments target rate of 2%. The inflationary pressure of the VAT rise and higher fuel costs will make next months figures higher still.

With all the quantitative easing still feeding in to the figures inflation could be on an upward bounce. The only levers the Bank of England monetary policy committee can pull are the interest rate ones!

This was one of the dangers of the quantitative easing policy, knowing when to apply the brakes will be a difficult but necessary decision to take.

My prediction is for a rise of one quarter of one percent in base rate after next months inflation figures are in.

You heard it here first! :)

  Grey Goo 17:48 19 Jan 10

Should kill off the green shoots of house price increases.

  johndrew 14:01 20 Jan 10

"Not yet anyway."

I hope not at all. What I fear is the consistent spin by certain Cabinet members and the apparent lack of concern shown in the spending by Government. I include the actions of RBS (owned by us - run by ?) in the Cadbury affair; they have raised the £bns for the buy out so if it does go off the rails we will (yet again) carry the can.

  OTT_B 14:17 20 Jan 10

I can't see it. July would be my bet, although an increase of 0.25% in April or May is also a possibility, providing the content of the budget doesn't have any affect on the MPC's decision.

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