Mortgage jump stokes inflation
Friday 24 March 1995
Headline inflation jumped by 0.6 per cent last month as higher mortgage rates fed through to the retail price index. But the annual rate only inched up to 3.4 per cent. And RPIY, the Bank of England's preferred measure of core inflation, which excludes mortgage interest payments and indirect taxes, eased from an annual rate of 1.9 per cent in January to 1.8 per cent.
RPIY was published by the Central Statistical Office yesterday for the first time on a regular monthly basis
The figures eased fears in the City of an imminent increase in interest rates to deal with the recent fall in sterling, which has more than offset February's rise in base rates. "The authorities can probably afford to wait a further month to see if the pound's drop is actually sustained," said Michael Saunders, UK economist at Salomon Brothers.
Publication of RPIY on a regular basis is bound to arouse suspicion that the Government is choosing to redefine inflation in a way that draws attention away from its own role in pushing up the price level through indirect taxes. The excise duty increases of the last Budget continued to boost inflation last month, with alcohol and tobacco jumping by 0.8 per cent on January. But from the authorities' viewpoint, RPIY has the advantage that the means being used to control inflation - both fiscal and monetary - are not part and parcel of the target rate.
Expectations of price rises have become slightly more modest, according to the latest survey of industrial trends made by the Confederation of British Industry. The balance of firms planning to increase rather than cut prices this month was still high at 27 per cent, but lower than in January and February. One company in two thought their prices would not change over the next four months.
Sudhir Junankar, the CBI's economics director, said: ``The outlook for inflation is a little more encouraging than earlier in the year.''
Export orders reached another record, with 32 per cent of the 1,325 firms surveyed reporting levels above normal. The positive balance of 14 per cent with above-normal over below-normal order books was the highest since April 1977. The companies included in the survey account for about half Britain's manufactures exports.
Domestic orders were strong too. A positive balance of 11 per cent had above-normal orders, the second-highest in the survey's history. Firms also expect strong gains in output in the next four months.
- 1 Lord Sewel quits: Peer 'boasts of having sex with BBC presenter and seeing 13 mistresses'
- 2 Topshop pulls 'ridiculously skinny' mannequins after being shamed by customer on Facebook
- 3 Five-year-old boy forced classmate to simulate oral sex at primary school, claims mother
- 4 Black and ethnic minority people twice as likely to be hit by Tory cuts than white people, report finds
- 5 Polish court orders bank to repay drugged man after he spends £23,400 in lap dance bar
Mystery over deaths of 3,000 Napoleonic soldiers in mass grave has been solved
Boris Johnson apologises after giving his wife a 'backie' on his bike on the streets of London
Black and ethnic minority people twice as likely to be hit by Tory cuts than white people, report finds
Labour leadership: New poll shows party is now even 'less electable' than under Ed Miliband
Denmark bans kosher and halal slaughter as minister says ‘animal rights come before religion’
The 9 charts that show the 'left-wing' policies of Jeremy Corbyn the public actually agrees with
Labour leadership contender Jeremy Corbyn says 'we can learn a great deal from Karl Marx'
The last thing Labour needs is a leader like Jeremy Corbyn who people want to vote for
What the Labour party could look like under Jeremy Corbyn
I am the Jeremy Corbyn supporter that many will tell you doesn't exist
Public anger after French sunbather beaten up by gang for wearing a bikini in Reims park
iJobs Money & Business
£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...
£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...
£40 - 45k (DOE) + Benefits: Guru Careers: A Research Associate / Research Anal...
£90000 - £98000 per annum + benefits : Ashdown Group: A truly exciting opportu...