Insights from the UK and beyond
– Fiona Shaikh is Reuters’ Economic Correspondent, based in London. –
Stubbornly high inflation has proved something of an inconvenience for the Bank of England over the last year, but the unrelenting rise in prices is turning out to be a real headache for ordinary Britons — one which is likely to get worse before it gets any better.
Consumer price inflation — the headline measure targeted by the central bank — accelerated to 4 percent last month, theΒ highest in more than two years and double the BoE’s target.
A great deal of the rise will have been down to the 2-1/2 percentage point rise in value added tax at the start of this year — a one-off move that will drop out of the statistics next year and mechanically bring headline inflation back down again.
Credit crunch, surging food prices, rising unemployment, house prices tumbling, maybe even a recession …. isn’t it all enough to make you feel miserable? And I’m not even mentioning the dismal British summer weather.
And all that desolation can be measured – the Misery Index is a financial pain barometer measured by adding the rate of inflation to the unemployment level.
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One of Gordon Brown’s favourite speech writers is leaving Number 10 to return to the Treasury. That gives Brown the perfect opportunity to draft in someone who has the ability to coin the kind of phrases that chime with the electorate and stick in people’s minds.
To date, that is something Brown, whose dismal year in office was underlined on Friday with a humiliating fifth place by-election finish for Labour, has signally failed to do. Sure, Brown wanted to move away from the accusations of endless spin that soured the public mood towards his slick predecessor Tony Blair.