As predicted here inflation continued to rise throughout Q1, hitting a new high of 3.4% on the government’s own CPI measure (target rate 2%) and reaching 4.4% on the more used RPI. Excluding housing the RPI rose by 4.8%.
This means as warned there is a ferocious sequeeze on living standards underway. Wages are going up only by around 1% on average, with some people experiencing declines. The price of petrol at the pump, food prices, heating bills and many other items are putting pressure on budgets.
The Monetary Policy Committee has obviously given up the day job of keeping inflation down to 2%. They are just helping the government’s pre election stimulus in a public sector led economy. I wonder what their excuse will be this time? It was all so predictable. They have lurched from too easy to too tight to too easy again! Why do they find it so difficult to see the obvious and read the cycle?
They should be telling the government the banks are not working properly, the economy is lop sided, official interest rates are unrelated to private sector reality and the public sector stimulus has forced the pound down so far, causing imported inflation. The fact that they say none of this shows they are neither independent in thought nor sensible.
Promoted by Christine Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU