Inflation the highest it has been since 1992

Last week, the Bank of England held interest rates at 5 percent because inflation, as measured by the Consumer Price Index, was 3.3 percent—above the Bank’s 2 percent target. Today’s Daily Mirror reports that the CPI will rise to 3.6 percent—the highest it has been since 1992—when new figures are announced on Tuesday. The Mirror also claims that its own Cost of Living Index shows that the ‘real rate’ of inflation is 18.53 percent.

One can question the economic accuracy of the Mirror’s number. But there’s no doubt that the rise in prices has been dramatic. The Mirror notes a 30 percent rise in fuel costs, a 14 percent increase in food prices with bacon up an incredible 43 percent and a 4.3 percent rise in household bills. 

With inflation returning as a problem, the Bank is almost certain not to cut interest rates, removing one possible way to kick-start the economy.