The hidden cost for consumers starting to creep down the walls, slowly.
The rise in the Consumer Prices Index (CPI) inflation rate was greater than analysts had expected. Retail Prices Index (RPI) inflation, which includes housing costs, also rose sharply to 4.4% in March from 3.7%. The CPI inflation rate is the measure targeted by Bank of England interest-rate setters, while RPI is often used as a benchmark in wage negotiations.
[Knock-on effects of] higher petrol prices were an important factor in rising consumer prices.
Despite the sharp rise in prices, analysts expect the rate of inflation to fall again in the coming months, as weak economic growth and high unemployment dampen price rises. The governor of the Bank of England, Mervyn King, has said that he expects inflation to fall back towards the target rate of 2% in the coming months. Analysts therefore expect the Bank to keep interest rates low to stimulate growth. (BBC)
I don’t think so, all the reflationary measures undertaken in the last months are hard to pin down —- what effects they will have on inflation and price stability for consumers. Nobody knows how much you have to open the window and when to shut it.
Excesses will find its way to consumers one way or the other.