Despite a slowdown in retail sales during March (Sales fell 0.4% in the month) UK CPI inflation increased to 3%. Retail Price Index RPI (which includes more items) increased to 4.2%. This is at the upper limit of the Government’s inflation target. It is the highest UK inflation rate for quite a while.
Last month, The Bank kept interest rates stable at 5%. The Governor of the Bank of England, Mervyn King said that they had a difficult balancing act.
On the one hand they had a faltering housing market and decline in consumer spending.
On the side of the monetary policy scales, they have rising inflation. Mostly caused by higher food and energy prices.
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[...] policy (interest rate cuts) 2. The MPC have little Room for manoeuvre. Recent statistics show inflation is rising; this is due to rising cost push factors – energy and food. Therefore, because of rising inflation, [...]
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