Business

Should we be afraid?
by Barbora Misakova

Well, Christmas is over, all the gifts were given away and unpacked and the New Year came so quickly. We cannot be hiding anymore and making excuses that today is a feast day. Holidays are over and so we can (or better say have to) come back to reality and to the troubles we had before: economy, prices, inflation and unemployment. I am not only saying it, but I really believe that analysts are never asleep. Now they are worrying about the inflation rate. Governor of Bank of England, Mervyn King said that higher consumer prices could be painful for consumers in next few years but necessary for slowing inflation rate. Recovery of oil prices from last year and sales tax cut ca! used increase of December’s inflation rate. As there was a drop of fuel and lubricant prices of 6.2 percent last year, transport was a major contribution to the increase of inflation. Now the prices are growing slowly. There is also another danger: growing demand in the Asian economies. That will have effect on the prices of commodities and energy, which will grow fast. Inflation target of Bank of England is 2 percent, but Jonathan Loynes, economist at Capital Economics, believes it can hit 3.5 percent or even more in January. He also says that “consumer price inflation will be falling back from a higher level than previously seemed likely and the risk is that it will prove stickier than expected.” But economic spokesman for the Liberal Democrats in the House of Commons, Vince Cable thinks the December figure was probably a temporary spike and with inflation expected to fall quickly there is no reason the Bank of England would want to raise interest rates ! in the near future. As said Gordon Brown: “We should not! read to o much into one month’s figures on inflation.”

related story (sgx16173): http://news.yahoo.com/s/ap/20100119/ap_on_bi_ge/eu_britain_e...

by Barbora Misakova for PocketNews (http://pocketnews.tv)

PocketNews is a new real-time news broadcaster delivering the latest and hottest news right to your pocket ! With global clients who want to be kept up to date, PocketNews is everyone's way of keeping in touch with the World.

posted by Blog TechSource @ 1:22 PM