Tuesday, March 20, 2007
UK inflation rate rises to 2.8%
Inflation in the UK accelerated in February, raising the possibility of further interest rate rises.
On the Consumer Prices Index (CPI) measure, inflation in February was 2.8%, up from 2.7% the month before.
The figure - pushed up by increases in air passenger duty and thus air fares - remains well above the Bank of England's 2.0% target for the CPI. There was a bigger rise in the Retail Prices Index (RPI), which rose to 4.6% from January's figure of 4.2%.
"Today's figures are a timely reminder that the Bank of England's tightening work is probably not yet finished," said Rob Carnell, economist at ING.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6469747.stm
The increases in inflation has renewed speculation that the Bank of England may have to raise interest rates yet again, in order to curb consumer borrowing. The interesting issue this month is that recent tax hikes, such as the large increases in duties on air travel, which were required to help balance the government's budget, have themselves had negative consequences in increasing inflation - which in turn may trigger higher interest rates and higher wage claims.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. For instance, monetary policy is discussed in detail in chapters 5 and 11, and the operation of monetary policy is examined in chapters 6 (tutorial 3) and 11 (at principles and intermediate level, respectively). Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
Inflation in the UK accelerated in February, raising the possibility of further interest rate rises.
On the Consumer Prices Index (CPI) measure, inflation in February was 2.8%, up from 2.7% the month before.
The figure - pushed up by increases in air passenger duty and thus air fares - remains well above the Bank of England's 2.0% target for the CPI. There was a bigger rise in the Retail Prices Index (RPI), which rose to 4.6% from January's figure of 4.2%.
"Today's figures are a timely reminder that the Bank of England's tightening work is probably not yet finished," said Rob Carnell, economist at ING.
Read the full story at: http://news.bbc.co.uk/1/hi/business/6469747.stm
The increases in inflation has renewed speculation that the Bank of England may have to raise interest rates yet again, in order to curb consumer borrowing. The interesting issue this month is that recent tax hikes, such as the large increases in duties on air travel, which were required to help balance the government's budget, have themselves had negative consequences in increasing inflation - which in turn may trigger higher interest rates and higher wage claims.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. For instance, monetary policy is discussed in detail in chapters 5 and 11, and the operation of monetary policy is examined in chapters 6 (tutorial 3) and 11 (at principles and intermediate level, respectively). Find out how to get LiveEcon at http://www.liveecon.com/. Download this blog as a Blogcast via the website.
# posted by Sam @ 19:01 
