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Creeping Inflation Prompts Interest Rate Fear
Creeping Inflation Prompts Interest Rate Fear
With consumer spending showing no sign of slowing down, it seems likely the Bank of England will increase interest rates in May. With inflation currently riding high at 3.1%, the Bank of England have apparently written to Gordon Brown with an explanation of why inflation has continued to grow.
Last month the Bank’s Monetary Policy Committee (MPC) decided to maintain the current interest rate of 5.25% but financial analysts are predicting a rise to 5.5% if inflation isn’t brought under control. The Bank of England are determined to bring inflation down to the 2% target figure.
Consumer spending on the high street has risen steadily throughout March and April. Some analysts cite the influenced of the warm weather spell – something which has prompted increased spending on outdoor items at least. Meanwhile a report published last week claims average earnings have increased by their largest margin in 3 years during the 3 months through to February.
All of which spurs inflation and hence interest rate rises in an effort to curb spending. That said, although some may be enjoying their pay increases and bonuses, unemployment figures were up in the 3 month period to February – the first rise since late 2005.
www.busissinberkshire.co.uk/finance
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