OverInflated

Source: http://www.marketoracle.co.uk/Article825.html

“But oil and gas prices are not to blame for the latest jump in the inflation rate. The problem instead is runaway growth in the money supply, caused by record low interest rates.”
Read more »

CPI, the MPCs target of inflation has risen to 3.1% the highest since the series began in January 1997.
RPI has also risen to 4.8%

http://www.statistics.gov.uk/pdfdir/cpinr0407.pdf

The question is, will the MPC sit on their hands or start fighting the inflation beast once and for all?
It seem the rate cut in 2005 was a VERY bad move on their part!

Source: http://www.ukiphome.com/comments.asp?sid=2009

OFFICIAL INFLATION TARGET: 2% - HOUSE PRICE INFLATION 15%

House prices increased by 3.6% in April, making a 15% increase in 12 months.

The official inflation target set by the Government, and managed by the Bank of England is just 2%, but of course Brown took house prices out of the equation by switching the BoE’s target from RPI (includes mortgage payments) to CPI (excludes them).

As BoE chief Mervyn King said at the time of the switch:

“Many people will think it a little strange to have an inflation measure which excludes house price inflation”

Indeed we do. This is one bubble of Brown’s making about which the Tories have absolutely no comment to make.

Read more »

Note: Strange how its unexpected to the press/economists, but to anyone with common sense, its expected!!

Source: http://uk.biz.yahoo.com/16042007/325/factory-gate-inflation-picks-unexpectedly.html

Factory gate inflation picks up unexpectedly

LONDON (Reuters) - Factory gate inflation accelerated unexpectedly in March and materials costs also rose more than forecast, official data showed on Monday.

The figures raised expectations that interest rates will rise next month, lifting sterling to a fresh three-month high against the dollar.

The Office for National Statistics said output prices rose 0.6 percent on the month in March, taking the annual rate to 2.7 percent — the highest since August 2006 and above forecasts for a steady reading of 2.2 percent.

The figures suggested firms are managing to raise prices to repair profit margins damaged by a spike in energy costs last year.

The Bank (TBHS - news) is expected to raise interest rates to 5.5 percent next month, having hiked already three times since last August to curb inflation.
Read more »

Source: http://business.timesonline.co.uk/tol/business/economics/article1648947.ece

A third of pay deals across Britain are running at 4 per cent or more in a survey that will spark fresh fears of another interest rate rise next month.

Income Data Services (IDS), the pay consultant, said that the average pay settlement rose to 3.5 per cent from 3.42 per cent in the three months to the end of February.

This matches the five-year high seen in January.

But IDS added that a quarter of 186 settlements in March and a third of those agreed so far this month were running at 4 per cent or above.

It said that higher living costs were feeding through.

Retail price inflation, on which most deals are based, is running at a 15-year high.
Read more »

Source: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/04/12/cnimf12.xml
Bold text my comments

The International Monetary Fund has backed expectations that the Bank of England will raise interest rates again, warning that higher borrowing costs may be needed to bring the sizzling housing market back under control.

Gordon Brown; IMF warns UK over housing inflation
Chancellor Gordon Brown: urged to make further cuts - I thought the BoE were independant of the government?

In its closely-watched World Economic Outlook, the Fund warned that rising inflation and unexpectedly strong house price inflation were key risks facing the UK. It also urged Gordon Brown to make further cuts to spending in an effort to bring the public finances back under control.

The warnings came as the Fund said the overall world economy is motoring towards its best stretch since the 1960s, as the developing powerhouses of the East would help make up for a sudden dive by the US.
Read more »

What happens when house prices are shooting up by ~10% per year, food is rising, petrol is rising and just about every other non-electronic goods are rising? The Monetry Policy Committee hold interest rates. With REAL inflation hovering around the 10% mark and wage increases still way below this (on average), I feel a lot of pain will eventually occur in the UK as people who do not hold assets become vastly poorer. The rich get richer whilst the poor get poorer.

04-April-2007
Hospital phone charges up 160%
Source: http://news.bbc.co.uk/1/hi/uk/6524545.stm

03-April-2007
Severn Trent increases water bills
Source: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/04/03/bcnsevern03.xml

The “shadow” MPC voted 8-1 for a rise in interest rates. Two of its members voted for a hike of half a percentage point.

The MPC meet on Wed 4th and Thu 5th April to make the real decision.

My bet is David Blanchflower votes for a hold, or even a cut as he has been known to be an ubber-dove.