Today’s inflation figures show that CPI has risen by 1.0% in a month to 2.9%. I would have expected a rise like that to occur after January’s figures are produced (these will include the VAT rise), but not in December where all the retail outlets were targeting Christmas customers with sales.
It shows that the inflation we had before the recession (it was relatively high) has not been beaten out of the system by the downturn, and is ready to return with a vengeance. We’re not officially out of the recession yet, but the double dip is on the horizon. The effect of quantitative easing and VAT increases will combine to drive inflation up, meaning that the Bank Of England is likely to raise interest rates sooner than later. Add in the effect of the market’s view on our debt and the outlook looks bleak.
If we do to take hold get growth in Q4 2009, expect recession again in Q1 2010.
Squiffy.
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