Bank of England gets the blame as inflation jumps in March

Apr 17, 2012

CPI rises to 3.7%, leaving Mervyn King even further away from government's 2% target

UK INFLATION rose unexpectedly in March, according to new figures from the Office for National Statistics. Last month's Consumer Price Index increased to 3.5 per cent - up from February's 3.4 per cent. The ONS said that the rise was predominantly driven by food and drink prices, which were 4.6 per cent higher in March 2012 than March 2011. The high cost of clothing was also cited as a factor.

The news wasn't all bad, with the Retail Price Index, which includes mortgage payments, dropping from 3.7 per cent in February to 3.6 per cent in March. But the jump in CPI means that the Bank of England and its governor Mervyn King are even further away from the 2 per cent target set by the government.

Vicky Redwood, chief UK economist at Capital Economics, told the BBC that inflation "should start to fall again before long" as the economic recovery loses momentum. Before March, the CPI had fallen for the last five months, having peaked at 5.2 per cent last September.

But that hasn't stopped commentators voicing their criticism over the latest figures. David Smith, economics editor of The Sunday Times, said that the Bank of England had "thought a drop in inflation to the ‘low threes' by March was a dead cert." He called the rise in CPI a "disappointment" and added: "The Bank can no longer blame George Osborne for high inflation."

The BBC's Andrew Neil called the figures "more bad news for the Government" and wondered how the Bank of England could possibly explain the figure. Guido Fawkes, the scurrilous political blogger, made a similar point: "Anyone seen that deflation Mervyn the Bank of England money printer keeps warning about?"

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