Labour claims split on inflation

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THE Government and Bank of England yesterday gave out what Labour claimed were conflicting messages about inflation. While John Major conveyed the impression that upward price pressure posed no threat by saying they were under 'lock and key', Rupert Pennant-Rea, the Bank's deputy governor, warned of the dangers of being complacent.

'It is tempting to feel that after all the pain of the past few years Britain has won the war against inflation, so we can afford to relax,' Mr Pennant-Rea said. 'That is a delusion and a dangerous one too.'

Gordon Brown, the shadow Chancellor, seized on the two statements and claimed they showed the Bank and the Government were 'at odds with each other. The Prime Minister should clarify his precise inflation target and whether he intends to meet it'.

However, Don Smith, an economist with Midland Global Markets, said that while the two statements struck different notes about inflation - 'one sharp, the other flat' - they were unlikely to influence the markets.

Labour's National Executive Committee approved a list of three potential candidates for the Eastleigh by-election. They are: Debra Shipley, 36, a researcher; Marilyn Birks, 42, a drama lecturer; Mark Walter, 35, a union official.