UK Inflation Target Rises Above - Part 1
The projected UK inflation target, created by the Bank of England was actually surpassed for the third month in December. The target was met and surpassed by 2 percent. This means that there will be fewer interest rate cuts in this year. The consumer prices have risen by 2.1 percent from earlier in 2007 according to the office for National Statistics. The economists are also expecting a rate of 2 percent. The study was down by interviewing 34 economists. There has also been an increase of 0.6 percent during most of the year.
Tesco has asked the Bank of England to cut the borrowing costs a little further, now that it is after the holidays. The holiday projected sales growth missed the target estimates meaning that the companies are still seeing affects of the credit crunch. The policy makers in December decided t o reduce the benchmark rate. This reduction is the first time it has happened in two years. One of the reasons is the higher credit costs that are outweighing the concerns on the consumer prices. Trevor Williams the chief economist believes that the banks are just going to have to accept that the inflation will remain above the target for 2008.
Changes for the Banks
It seems that in February there is a projected cut for the borrowing costs. This means that the rates are not going to fall below 5 percent, but that the some decrease will be necessary for the slowing of the economy. The Bank of England last month already reduced their expected profits by 5.5 percent. Bloomberg News did a survey the first week in January regarding the economy and the expected results. It seems a rate fall to 4.75 percent is likely to be seen by the end of this year. This means the pound, which has already seen a drop, may climb to 75.54 pence against the Euro. It was trading at 75.68 pence yesterday at noon.
There are more changes to come it seems with the food prices. The food prices are going to be affected by the oil prices that have been reaching $100 per barrel. It seems that the food prices are also going to affect how the cost of living will change. It is projected that the fuel inflation and cost of living is going to significantly change for Britons. The food prices have already risen 5.9 percent in December from earlier in 2007. The cost of liquid fuels such as heating oil has increased by 32 percent, and furniture has increased by 0.9 percent. This means that those trying to live in the UK will be battling higher utility bills as well as food.
Related posts:
- UK Inflation Target Rises Above - Part 2 Room to Cut The Chancellor of the Exchequer has suggested...
- UK Inflation Target Rises Above - Part 3 Housing Prices The housing market has also seen some shifts....
- Interest Rates and The Bank of England The Bank of England has the power to deal painful...
- Mortgage Market Slump There has been a slowdown in the mortgage market due...
- Housing Prices May Crash - Part 2 Bank of England Cutting Rates The Bank of England is...
Related posts brought to you by Yet Another Related Posts Plugin.