Bank figures ominous for inflation

24-08-2006

New Bank of England (BoE) figures released today revealed an increased flow of money in the UK in May, fuelling inflation fears and confirming pessimistic predictions by the bank's governor, Mervyn King.

Today's figures show that broad money – cash outside institutions like banks, building societies and private sector retail banks – rose in quantity by £8.5 billion after seasonal adjustments, while mortgage lending of broad money was also up by 0.9 per cent, equalling £16.1 billion.

Although 12-month growth rates fell on average and the broad money flow increase was below the £14.2 billion average for the previous six months, observers believe today's figures showing continued growth in the overall amount of cash in Britain are ominous for inflation.

Fears exist that Britain's already struggling retail sector, which is reporting sustained price cuts in an effort to keep consumers spending on the high street, could combine with rising amounts of money flooding into the UK to place sterling under heightened inflationary pressure.

The bank also published its statistics for May's capital issues, which were up £4.1 billion to £46.7 billion, further boosting the flow of money in the economy.

Today's statistics are likely to cement the next interest rate move by the monetary policy committee (MPC) as upwards, fuelled further by the current "mini-boom" in the housing market.

Inflation currently stands at a 2.2 per cent rate, recently raised 0.2 per cent above the bank's preferred 2.0 per cent rate.


Bookmark with:
Bookmark with: Digg Digg Bookmark with: Del.icio.us Delicious Bookmark with: Reddit Reddit Bookmark with: StumbleUpon StumbleUpon Bookmark with: Google Google Bookmark with: Technorati Technorati Bookmark with: Netvouz Netvouz

Latest News:

Search News
News Front Page
Accountancy / Tax
Advertising / PR
Armed Forces
Automotive
Aviation / Aerospace
Banking / Finance
Charities / Voluntary
Childcare / Youth
Construction / Property
Customer Services
Education / Training / Teaching
Emergency Services
Engineering / Electronics
Entertainment / TV / Theatre
Graduate Roles
Health / Beauty
Hotel / Catering / Restaurants
HR / Recruitment
Insurance / Pensions
International / Overseas
IT / Internet
Legal
Management / Business
Manufacturing / Industry
Media / New Media / Creative
Medical / Healthcare
Pharmaceutical Industry
Public Sector
Retail / Wholesale
Sales / Purchasing / Marketing
Science / Technology
Secretarial / PA / Admin
Skilled / Semi-skilled Manual
Telecommunications
Transport / Logistics
Travel / Tourism / Leisure