Brown backs rate rise as inflation goes above target

Click to follow
The Independent Online

Gordon Brown gave the green light for a rise in interest rates yesterday as official figures showed inflation had risen above the Government's target.

The Chancellor of the Exchequer said the authorities would be "resolute" in fighting inflationary pressures that were emerging across the world.

His comments came a day after Mervyn King, the Governor of the Bank of England, warned the prices of imported goods into the UK were starting to rise.

Speaking at an Islamic finance conference, Mr Brown said: "Even as we cope with a doubling of oil prices and the rises in utility prices, we will maintain our vigilance against inflation."

On Monday night, Mr King said inflationary pressures, fuelled by central banks keeping rates too low in Europe, the US and Japan, had reached the UK's shores.

Yesterday, official figures showed inflation rose 2.2 per cent in May from April's 2.0 per cent, which is the official target. It is the first time it has been above target since last November. The increase was driven by a record increase in gas and electricity bills and petrol price rises. Gas bills rose 6 per cent on the month. Electricity costs rose 4.2 per cent.

The Office for National Statistics said most of the 0.2 per cent rise could be accounted for by higher energy costs. Gas bills added 0.09 per centand electricity added 0.06 per cent.

Comments