The Debt Clinic
Let's Make Your Finances Better
- Debt Management News (40)
- IVA News (9)
- Remortgage News (12)
- Loan News (19)
- Trust Deed News (3)
- Credit Check News (6)
- Latest News
- Most Popular Articles
Post New Article
Easy Product Advisor
Which solution is right for you?
Our test will give you an unbiased look at which service can help you
Bank of England Issues Warning on Inflation
The Bank of England has said that British households are becoming more aware of inflation as energy, fuel, and food prices continue to rise.
In the Bank of England's second quarterly bulletin this year, it said that Britons also believe that inflation is set to rise throughout 2008, which will pile pressure upon people trying to clear debt.
The bulletin also revealed that most people believe that inflation will stand at 4.3 per cent in a year's time.
According to the Office for National Statistics (ONS), the Consumer Prices Index (CPI) increased by 3.3 per cent in May, from 3 per cent in April - the fastest increase since the CPI measure began in 1997.
The cost of food, especially meat and vegetables, and non-alcoholic drinks was the biggest contributor to the increase, although soaring energy bills also had a part to play.
Bank of England governor, Mervyn King has also warned that British inflation is likely to rise above 4 per cent before the end of the year, due to the cost of energy and food.
In a letter to the Chancellor, which the governor of the Bank must write if inflation exceeds the Government's 2 per cent target by more than one per cent point, he insisted that the rate of inflation would most likely peak towards the end of this year, as long as there were no "unexpected increases in oil and commodity prices”.
However, Mr King also made clear that “there are considerable uncertainties, in both directions, around this, and any such projection is particularly sensitive to changes in domestic gas and electricity prices”.
The governor has only written this sort of letter to the Chancellor once before, in April 2007, when inflation increased to 3.1 per cent.
One decision some economists believe the Bank of England might make this summer would be increasing the base interest rate. This would be bad news for those trying to make repayments, looking to take out a second mortgage or seeking secured loans.
Loan News posted on 23 June 2008
