Inflation In The UK Reaches New High
The Governor of the Bank of England will have been sat behind his desk this week writing another letter which begins “Hello Darling” as he is required to write to the Chancellor of the Exchequer, Alistair Darling, to explain the reasons why the rate of inflation has risen once again and is still well in excess of the Governments target figure of 2 per cent.
During the month of August, the Consumer Prices Index (CPI) rate of annual inflation has increased again, reaching a rate of 4.7 per cent. Up by 0.3 per cent from July when the figure stood at 4.4 per cent and Mervyn King, the Governor of the Bank of England, has predicted that the figure is likely to rise to 5 per cent before the end of the year.
But on a more positive note, he also believes that it is not likely to exceed this figure and that we should hopefully start to see the rate of inflation falling by the beginning of next year.
According to the Office for National Statistics (ONS), the main culprits for this most recent rate rise were increases in the price of commodities such as gas and electricity which rose in price by 27.7 per cent and 18 per cent respectively on a year by year basis to August. The price of food also continued to increase, reaching a rate of 14.5 per cent for the year. To counter these increases, the cost of petrol fell between July and August, making life easier for the motorist.
There was also a downward influence from the housing sector, as banks and building societies reduced the cost of interest payments on mortgages and home loans, making it slightly easier for someone to be able to afford a loan to buy a house, coupled with the fact that the average price of a house has fallen slightly over the course of the past month.
