Inflation could go higher if workers demand pay increases, Mervyn King warns
His warning came in a letter to George Osborne, the Chancellor, as the Bank unveiled a sharp rise in inflation, taking some economists by surprise.
The annual rate of inflation, as measured by the Consumer Prices Index (CPI), rose to 4.5 per cent in April, up from 4 per cent in March.
The rise was due to a jump in transport costs, particularly Easter rises in air and sea fares, and alcohol and tobacco, which were hit by large increase in duties, levied in the Budget.
Mr King also said the decision by Mr Osborne to raise VAT from 17.5 per cent to 20 per cent was a significant factor in why inflation was so high. CPI is now at its highest level since October 2008.
It was not just the price of petrol that increased transport costs; the price of plane and ferry tickets also jumped. The Office for National Statistics said "by far the largest upward effect" on prices came from air transport, where fares rose by 29 per cent between March and April. Sea fares rose by 22.3 per cent.
More from the source: Inflation could go higher if workers demand pay increases, Mervyn King warns - Telegraph
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AtW's comment: it's as if Merv is based on Alpha space station and he reports to ze Chancellor things that he observes neutrally from far away. It's his job to deal with inflation - it's not like we are talking about some small numbers here, the delta between interest rates and official inflation is now 900%.
At the end of article someone suggests that Bank can make matters worse by increasing rates but FFS, those households that can't handle increase of rates from 0.5% to 1-2-3% when they borrowed money when rates were 5%+, they totally deserve to go bust - the longer such crazy low rates are kept, the more people will borrow money and later this problem will be for real.
Why is that man still in the job? (rhetorical question).
His warning came in a letter to George Osborne, the Chancellor, as the Bank unveiled a sharp rise in inflation, taking some economists by surprise.
The annual rate of inflation, as measured by the Consumer Prices Index (CPI), rose to 4.5 per cent in April, up from 4 per cent in March.
The rise was due to a jump in transport costs, particularly Easter rises in air and sea fares, and alcohol and tobacco, which were hit by large increase in duties, levied in the Budget.
Mr King also said the decision by Mr Osborne to raise VAT from 17.5 per cent to 20 per cent was a significant factor in why inflation was so high. CPI is now at its highest level since October 2008.
It was not just the price of petrol that increased transport costs; the price of plane and ferry tickets also jumped. The Office for National Statistics said "by far the largest upward effect" on prices came from air transport, where fares rose by 29 per cent between March and April. Sea fares rose by 22.3 per cent.
More from the source: Inflation could go higher if workers demand pay increases, Mervyn King warns - Telegraph
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AtW's comment: it's as if Merv is based on Alpha space station and he reports to ze Chancellor things that he observes neutrally from far away. It's his job to deal with inflation - it's not like we are talking about some small numbers here, the delta between interest rates and official inflation is now 900%.
At the end of article someone suggests that Bank can make matters worse by increasing rates but FFS, those households that can't handle increase of rates from 0.5% to 1-2-3% when they borrowed money when rates were 5%+, they totally deserve to go bust - the longer such crazy low rates are kept, the more people will borrow money and later this problem will be for real.
Why is that man still in the job? (rhetorical question).
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