UK inflation rises to 4.4%
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The UK consumer prices index has risen to 4.4 per cent in July, according to the Office for National Statistics.
The consumer prices index is up 0.2 per cent from 4.2 per cent in June, however the retail prices index remains unchanged at 5 per cent.
The Bank of England said last week that it remained confident that inflation would return to its target level in the next two years. Bank of England governor Mervyn King must write another letter to Chancellor George Osborne expaining the inflation level, which is more than double the 2 per cent target.
The ONS says the rise in the CPI came from a number of areas, such as miscellaneous goods & services, clothing & footwear, furniture, household equipment & maintenance and housing & household services.
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Readers' comments (7)
steven Farrall | 16 Aug 2011 10:36 am
As an FT paper pointed out, the Bank of England has an absolutely woeful record on forecasting anything, as is totally unsurprising given that none of us is blessed with second sight.
Second, this is not 'inflation'. This is the rise in the cost of living as a result of inflation. Inflation is a function of money (the supply of it and the quality of it) not prices. Price rises are a result of inflation, not its cause.
Hence thirdly, these price rises are the result of New Liebours and Gordon Brown's epic failure with monetary and fiscal policy and OUR money.
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Anonymous | 16 Aug 2011 10:40 am
Taking out tax increases its only 2.9%. Not of any real concern. In 12 months time the media will probably be banging the drum over deflation. Inflation is probably going to help us get out of our current mess and despite the criticism of Mr King I believe he is helping to slowly guide us through whilst privately holding the same view.
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steven Farrall | 16 Aug 2011 11:07 am
Anon 10.40 '...inflation is probably going to help get us out of our prsetn mess...'.
In other words you approve of the officially sanctioned theft of our wealth by the state? You approve that the UK reneges on its debts by the devaluation of the purchasing power of the Pound Sterling? You approve of the massive mis-allocation of capital that results from the impossibility of wealth creators to make any meaningful economic calculation under an inflationary regime? You approve of the special privilidge given to debtors over lenders implicit in such a strategy?
Inflation is an evil. Since the political class and their bureaucratic henchpersons were given the insane gift by Keynes that government spending and inflation are a Good Thing we've been on a slow car crash of the relentless destruction of national wealth built up over centuries of enterprise and hard work.
I recommend that you go and teach yourself some real economics. Start with Henry Hazlitt, Economics In One Lesson. Or for something lighter try 'How an Economy Grows and Why it Crashes' by the brothers Schiff.
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Anonymous | 16 Aug 2011 11:52 am
Steven Farrell, from Anon 10.40, and your suggestions are?? Describing inflation as 'evil' is slightly simplistic. I appreciate you have quoted a few of your favorite authors however economics does not parade a strict path as history has clearly demonstrated. We are in a new era which calls for new ideas. Demand is low and our current inflation is imported. It is the view of many, albeit not yourself, that rising prices will help create demand through the fear of not buying now. The current lack of demand is restraining any potential recovery and we are facing a decade of stagnation. Inflation will also erode both government and personal debt which will choke our economy for decades to come. I gather you hold a different view and appreciate the risks associated with high inflation however I would be willing to listen to your proposal in tackling the current economic woes. Please try to avoid taking the high moral ground and suggest something meaningful. Finally please do not attempt to sponsor your argument with my choice to remain anonymous.
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steven Farrall | 16 Aug 2011 7:28 pm
Anon @ 11.52
Thank you for taking the trouble to respond.
1. The recommendations were not my 'favourite authors'. thye happen to be two very good easily readable introductory works on economics.
2. Au contraire economics does indeed take a 'strict path'. Or rather it would do if it were not for the failures brought about by the interference by politicians favouring special interests and the wrong headed analysis of the issues by central planners like the bank of england.
3. Rising prices do not ever 'create demand'. Anyway it is not demand that is the problem, since demand is infinite. It is supply, or rather production. All of economics is about maximising production - in the most efficient way.
4.The 'lack of demand' argument is entirely false. Economies do not grow because people spend. People spend because economies grow.
5.There is something tautological about your statement on debt, inflation and demand.
6. The solutions are straightforward and have been set out by many people - it's just that these solutions are unpalatable to politicians, functionaries and the client state. they are, in no particular order. Run sound money. Cut, nay slash government spending. Cut, nay slash taxes on labour and capital. Slash all the pointless regulation. Reform banking by amending the 1844 bank Charter act. Decentralise the State. Denationalise everything you can, including health and education and the police. Localise politics and bring on MP recall laws. get out of the sclerotic EU and seek bilateral free trade agreements with every country we can. etc etc Another book for you is The Plan by Hannan and Carswell.
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Norm d'Plume | 16 Aug 2011 10:53 pm
"Hi Dave,
Guess who? Yeah, it's me again and, guess what? Nobody expected inflation to be down to 2% yet but, because the press and the opposition make the Government look stupid if they revise estimates to what is realistic, I have to waste time writing you yet another letter, telling you what you already know. I hope this missive is dressed up enough not to look too much like the others, but you know how it is......
Yours truly,
Merv
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Anonymous | 17 Aug 2011 9:49 am
Good morning Steven. Thanks for your response. I take on board your various points however completely disagree. Economics does not follow a strict path even if, as per your argument, you remove fiscal policy. If this were the case why would we even require monetary policy? Please provide an example of this ‘strict path’. When I first read your previous comments I had a small appreciation for your study of economics. Nigel Farage now springs to mind. I no longer feel it necessary to pursue a discussion with you as it is clear you live, or aspire, to live in a world with no moral / governmental responsibility. We live in a democracy and whilst it is far from perfect I suggest you continue to focus your studies on politics and leave the economics to others.
Anon 11.52
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