Inflation hits 3.4%

Courtesy of the LES.................Inflation hits 3.4% thanks to sky high petrol prices.

They say soaring petrol prices sent annual inflation to 3.4% last month after the cost of living rose quicker than expected, official figures showed today.

Consumer Prices Index inflation leapt from 3% in February after petrol prices rose by 2.7% in the month, according to the Office for National Statistics.

The CPI rise - bigger than economists had forecast - presents a headache for the Government at the start of a crucial week for economic data.

The ONS said energy prices also contributed to the rise in inflation as well, but the pressure from petrol threatens to draw attention to Labour's 1p on fuel duty imposed on April 1.

Motorists have been facing record costs at the petrol pump, with oil prices hitting 18-month highs. The AA said the average cost of a litre of petrol was 120.9p, against 95.2p a year ago.

Retail Prices Index inflation - which includes the cost of mortgages and housing - also rocketed last month, reaching 4.4%, the highest since September 2008.

CPI inflation eased back sharply in February to 3% from 3.5% in January and economists had only expected the benchmark measure to rise to about 3.1% last month.

If CPI remains more than 1% above the Government's 2% target this month, Bank of England governor Mervyn King will be forced to write another letter of explanation to the Chancellor.

He last wrote to Alistair Darling after the CPI's spike in January, but the Bank has forecast that inflation should ease by the third quarter.

The ONS figures show a record uplift from transport costs, including petrol prices and air fares, with the annual rate of inflation 11.3% - the highest since at least January 1997.

Food costs also pushed CPI higher, with vegetables affected by the adverse weather at the start of the year.

The data is the first in a week of economic indicators, culminating in the estimation of first quarter gross domestic product on Friday. There are also the latest statistics on unemployment, minutes of the last interest rate meeting, retail sales and borrowing figures for the full financial year.

However I am no financial expert but I feel they are also missing the fact that our lords and Master banged £175 BN of quantative easing into the market place.
Have a wee look at what happened to Japan when it hit 15% hyper inflation due to quantative easing paybacks.

The economy is over the worst and Labour did it......puke

Gordon Brown is hoping to convince voters that the British economy is through the worst — and that it was a Labour Government got us through it.

See Here.

And if you believe that they al-Megrahi was just a compassionate release and Afghanistan is winnable.

Mr Darling said yesterday that he expected the British economy to start growing again around the end of this year — as a result of measures such as the bank bailouts, emergency tax cuts and the fiscal stimulus package.

Even if this is correct economists widely expect unemployment to continue to rise, peaking at about 3 million next year from the current 2.38 million.

See this post here last time badger made a financial statement.

Alistair Darling, who is hosting the meeting, will try to ensure greater international co-operation in response to the banking crisis.

Mr Darling will also have to address the issue of executive bonuses — Nicolas Sarkozy, the French President, has already been seeking support from Angela Merkel, the German Chancellor, to introduce global rules on rewards for traders. Mr Sarkozy is trying to push the issue high on the agenda of the G20 summit in Pittsburgh later this month.

But if you look at it both France and Germany have a manufacturing base far greater than ours. There dependancy upon financial trading is a damn site less than the UK's so whats the betting thats a non starter then?????

And see here for bets on the PM going to the G20.........just gonna love that quiet chat over a drink in the eve...........oh to be a fly on the wall

Dont Speak too Soon

Remember these little news stories on the 13 August.

Basically the Germans and the French stated publically that they were coming out of recession after showing 2 quarters of growth.

Then we see this headline coming out of Germany earlier today.

German state to lend directly as second credit crunch looms

Germany could directly intervene in the credit insurance and lending markets as soon as September to head off a looming credit crunch, as it fears the economic recovery may soon falter as banks refuse to roll over loans.

The finance minister, Peer Steinbrück, said broad sectors of the German economy are in trouble even if the country has avoided a full-blown lending crisis so far.

"Conditions have become much tougher for some industries – electrical engineering, machine tools, suppliers, chemicals and shipbuilding. We have clear evidence from both small and large companies that lending is jammed.

"The banks are not stepping up to their responsibility to provide credit," he told the German paper Handelsblatt.

"Some indicators that have performed better, but... it is too early to say we have shaken off this crisis. There is still lots of risk and uncertainty, and no grounds for complacency. The fact that GDP proved better in the second quarter with 0.3pc growth is somewhat reassuring, but let's not forget the economy has shrunk 7pc from a year before."

So basically German banks still refuse to lend. The small amount of money that appeared in circulation is now locked down and some one shot their mouth off a little too early to state all was well with German economy.
I do not realise that Gordon Brown and Badger Darling were involved with the Germans as well.

Recession Worse Than Expected

I posted last Thursady about the stream of lies and non-beliefs that seem to pour forth from government about "The reccession".

Basically we have no clue really.
The bending the twisting of facts actually makes me think we are really in a worse predicament than we thought.

I feel if the actual true fact were out there then yes...........the summer of riots etc could actually happen.

The peasant revolt could actually happen again so to speak.

I also know for a fact having seen Mervin Kings take on things this am that
1. He is at major odds with the government, Mandleson, Brown and Darling over fiscal policy
2. He is no Labour voter.

From this am and I quote:-The recession has hit the economy harder than previously thought but the prospects for economic recovery were "somewhat stronger", the Bank of England has said.

The Bank said it expects the economy to shrink by around 5.5% at the lowest point this year before beginning its recovery.

But it had seen encouraging signs that its efforts to pump more money into the financial system were taking effect.

Bank governor Mervyn King said: "It is likely that output stabilised in the middle of this year.

"Business surveys and other short-run indicators suggest that growth is more likely than not to resume over the next few quarters."

In its quarterly inflation report, the Bank forecast that the inflation benchmark used by rate-setters would stay well below its 2% target for much of the coming two years.

Mr King said it was more likely than not that he will need to write to Chancellor Alistair Darling later this year to explain why inflation has fallen more than one percentage point below the target.

The Bank said that, while the economy had shrunk more than expected at the beginning of the year, the pace of contraction had slowed.

And stronger results from business surveys "suggested that the trough in output was near".

Personally I am a damn site more inclined to listen to Mervin King than No11.

But basically

Trough in output was near- So we have not got to the worst bit yet!
The economy had shrunk more than expected at the start of the year, the pace of contraction had slowed - but not stopped, so the budget prediction of a 3.5% growth was cobblers (but we knew that)!
Inflation about to go negative - which is just as bad as hyper inflation.
Indicators suggest that growth is more likely than not to resume over the next few quarters - so when may we actually see it START and I am only asking for a start here to grow!
Unemployment went another 220K the wrong way.
Government debt totally out of control and the worst in our history.
Mortgages although saying more are being granted are becoming a point of a fast buck to lenders desperate to recoup money.

We are many years from seeing the end I am afraid.

Northern Rock

Peter Brooke to the rescue again in view of the Northern Rock news this am.

A very insightful man.