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Rapid inflation could lead to interest rates rise

The Government must do more to cushion the blow of rising energy prices to avoid damaging effects on the North East economy, according to the NECC. The Bank of England is under increasing pressure to raise interest rates as soaring energy costs push inflation well beyond the Chancellor’s 2% target. Mike Parker, NECC spokesman, said: “The Bank of England is being backed in to a corner over interest rates if it is to hit Gordon Brown’s stringent inflation targets. “The Government has to wake up to the effects of soaring energy prices, made worse by the conflict in the Middle East which is forcing up the cost of oil. “NECC’s latest quarterly economic survey showed businesses in the region are under increasing pressure, a situation which would be worsened by a rise in interest rates.” The Office for National Statistics said that the Consumer Price Index (CPI) had risen to its highest level since 1997. As well as rising gas and electricity bills, it blamed upward pressures from the prices of vegetables, tobacco and furniture and furnishings.

This was posted in Bdaily's Members' News section by Ruth Mitchell .