Inflation starts to rise

The Small Business Finance website has reported that inflation has started to creep upwards.

Consumer Price Inflation (CPI) annual inflation, the government’s target measure, was 1.5 per cent in October, up from 1.1 per cent in September.

Meanwhile, the retail inflation (RPI), which includes mortgage interest payments and housing costs, rose to -0.8 per cent from -1.4 per cent, according to figures from the Office for National Statistics.

Inflation accelerated during the month mainly because of upward pressure from fuel prices.

David Kern, chief economist at the British Chambers of Commerce, says: ‘These figures are closely in line with the Bank of England’s recent forecast that inflation will accelerate sharply in the next few months, possibly reaching 3 per cent, before falling again later next year.’

He adds: ‘Given the serious risks facing the UK economy and the dangers of a double-dip recession in 2010, it is important for the MPC to persevere with an aggressive quantitative easing programme, and to consider special measures aimed at boosting bank lending to businesses.’

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Rising inflation -v- interest rates -v- property prices; hard to imagine a time when these three important economic factors have had all such bearing on the state of the economy at the same time.

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