December 16, 2003


Inflation falls short of Brown's target: Pundits rethink their forecasts on interest rates as new prices index reflects widespread retail discounting (Larry Elliott, December 17, 2003, The Guardian

The City was last night hedging its bets over the timing of the next rise in interest rates from the Bank of England after the government's new measure of inflation fell last month to its lowest level since the summer.

Price discounts forced on clothing and footwear shops by the sluggish start to Christmas cut the annual rise in the consumer prices index to 1.3% in November, well below the target of 2% set by Gordon Brown in last week's pre-budget report.

Analysts said the fall in the cost of living coupled with the presentational difficulty the Bank would have in raising borrowing costs at a time when inflation was undershooting could stay the hand of the monetary policy committee for the time being.

They should be cutting, not hiking rates.

Posted by Orrin Judd at December 16, 2003 9:52 PM
Comments for this post are closed.