UK continues to be plagued by rising inflation |
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Wed, 18 May 2005 10:00
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The Office of National Statistics figures for the month of April show no that there is no respite for Britons from the ever rising inflation. The figures show that for the second consecutive month the headline CPI index rose by 1.9 pct from the same time last year.
The inflation showed no signs of dipping due to higher charges for water and sewerage and increasing costs in banking services. Analysts say that this figure of 1.9 percent is slightly below the median forecast for a year-on-year rise of 2.0 percent. It must be noted that if this figure rises above 2.0 percent then the Bank of England (BoE) would have to consider hiking interest rates.
The BoE's monetary policy committee had voted to maintain the interest rates steady at 4.75 percent last month. However, in the quarterly inflation report that was released last week, BoE warned consumers to expect the CPI inflation to rise above the 2.0 percent later in the year. The inflation rate had registered a record rise of 1.9% in March, which is up from a low of 1.1% last September. This is the highest in seven years.
| Howard Archer, chief UK economist with research group Global Insight was of the opinion that the BoE should be satisfied with the trends shown in April figures and is likely to keep interest rates on hold in June. 'Significantly, furniture and furnishing prices fell back in April after spiking up in March, reinforcing the impression that many retailers are unable to make significant price rises stick,” he added.
The Office of National Statistics report underlined the fact that fresh vegetables, furniture and air fares were on a downward trend in April, but these were counterbalanced by rising costs in water and sewerage charges, rents, banking services and restaurant meals.
The Inflation Report concluded by saying, "Strong global economic activity and rising commodity prices have lifted the prices charged by the UK's trading partners in their own currencies. And these prices are likely to rise further over the coming years". However, Britain's CPI inflation rate of 1.9 per cent in April is marginally less than the 2.1 per cent European average.
Concurrent rise in the wider Retail Price Index measure of inflation was 3.2% in April as compared to last year and by 0.6% from March.
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