Inflation knocked off the news headlines by market turmoil
As stock markets in the Far East fell by around 5% overnight it seemed obvious that the headline inflation figure in the UK would not receive much attention today. The government will be thanking their lucky stars that this is the case because the rate of inflation in the UK has reached a new 16 year high of 4.7% and it is expected to go higher before succumbing to the crumbling oil price.
Spare a thought for Bank of England governor Mervyn King who will again be forced into the humiliating act of writing a formal letter to the Treasury explaining why the government's inflation rate target of 2% has been breached and what exactly the Bank plans to do about it. To say that Mr King will be stating the obvious in his letter to Alistair Darling is an understatement!
While the signs are that the rush on inflation will soon be over, with some pressure taken off the cost of living, the rate announced today was around 0.1% higher than many in the City had expected. However, in the turmoil of the current economic meltdown it seems as though the rate of inflation is the last thing on trader's minds.
Share this..
Related stories
UK government in fight for Vauxhall survival
As we covered yesterday, General Motors is literally fighting for its life with the US government insisting upon a breakup of the international vehicle manufacturer. The situation has become very complicated over last few weeks amid signs that the German government, where 50% of GM Europe is based, has taken control of talks. While Lord Mandelson has claimed he is working with the German authoriti...
Read MoreConsumer spending to slow in face of crunch
UK banks' adoption of more stringent lending criteria is set to significantly cut consumer spending levels this years, a member of the Bank of England's monetary policy committee has predicted. Tim Besley issued the warning today in a speech at the Institute of Fiscal Studies, in which he noted that even small increases to the cost of borrowing for consumers have significant repercussions on spend...
Read MoreLife is still tough in UK retail
In the aftermath of the last couple of days it might be easy to slip back and think that the worst is over but life on the high streets of the UK is still very very tough. The move to reduce interest rates is welcomed but this is not the crux of the problem as liquidity for businesses is still very thin on the ground. Even a ground swell of enthusiasm from the UK consumer would have little impac...
Read MoreShould the Bank of England really be independent?
Earlier this week we saw the beginnings of what could turn out to be a major spat between the UK government and the Bank of England. Gordon Brown came out with a suggestion that a tax on all financial transactions should be introduced worldwide in order to create a fund which would bailout the financial sector in the event of future credit crunch like situations. However, Mervyn King pointedly sid...
Read MoreHas George Bush lost his bottle in the car manufacturers crisis?
Despite suggestions only yesterday evening that George Bush was on the verge of announcing 11th hour rescue package for the US car manufacturing industry it appears that today second thoughts may be sweeping through the White House. The silence from within the US walls of power is deafening and more and more people are seriously concerned about the immediate future and the long-term viability of t...
Read More