{"id":72617,"date":"2021-05-20T08:33:54","date_gmt":"2021-05-20T08:33:54","guid":{"rendered":"https:\/\/secondchargemortgageuk.com\/?p=72617"},"modified":"2021-05-20T08:33:56","modified_gmt":"2021-05-20T08:33:56","slug":"inflation-doubles","status":"publish","type":"post","link":"https:\/\/secondchargemortgageuk.com\/inflation-doubles\/","title":{"rendered":"Inflation doubles as fuel, clothing and ice-cream all soar in price"},"content":{"rendered":"\n

Inflation doubled in April and could do the same again by the end of the year, some economists warned today, as pressure grows on the Bank of England to raise interest rates.<\/p>\n\n\n\n

While that would risk curtailing the economic recovery, some say rates are simply too low at 0.1% and that the Bank is underestimating the chance of inflation spiralling out of control.<\/p>\n\n\n\n

Prices rose at 1.5% in April up from 0.7% in March, higher than expected. Gas, electricity and petrol all jumped, as did more frivolous items such as chocolate and ice-cream \u2013 there has been talk of a 99 Flake shortage in the summer.<\/p>\n\n\n\n

Ernst & Young says inflation will hit 2.7% in late 2021 or early 2022. \u201cFurther rises in consumer price inflation are highly likely,\u201d says E&Y.<\/p>\n\n\n\n

The Bank is supposed to keep inflation at 2% — it has undershot that target for the duration of the pandemic and for the last 21 months running.<\/p>\n\n\n\n

But as the UK emerged from lockdown, pent up demand from consumers saw a spending splurge. By some estimates there is \u00a360 billion of \u201cexcess\u201d cash in bank accounts ready to be spent.<\/p>\n\n\n\n

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Steven Cameron, pensions director at Aegon, said: \u201cAs the door to the economy reopens the expectation is that consumers will rush to spend savings built up over lockdown. There is concern that this creates inflationary pressures that pushes rates well beyond both the target and anything that consumers have had to deal with in recent years or for many in living memory.\u201d<\/p>\n\n\n\n

The most bearish economists note that there are price pressures in the pipeline on many vital goods, including energy and timber.<\/p>\n\n\n\n

And they say that if you strip out a temporary cut in VAT on hospitality, inflation is actually already at 3.2%.<\/p>\n\n\n\n

In the US, where government spending is even higher than in the UK, inflation hit 4.2% in April.<\/p>\n\n\n\n

Ed Monk, associate director for Personal Investing at Fidelity International commented: \u201cInflation has started to take off. More than doubling to 1.5% in April, it is now closing in on the Bank of England\u2019s 2% target and could blow past that if the demand in the economy continues to build in the coming months.\u201d<\/p>\n\n\n\n

Simon French at Panmure Gordon said: \u201cThese numbers confirm that inflation is going to pick up strongly this year, aided by comparisons with such depressed prices in 2020. However the Chancellor should hold his nerve. Inflation ultimately is a sign the economy is reopening, jobs are being created and livelihoods are being saved. To try and deflate the UK economy now would be a policy mistake.\u201d<\/p>\n\n\n\n

Petrol rose by 1.8p a litre to 125.5p. Gas and electricity bills both rose by more than 9%.<\/p>\n\n\n\n

Ruth Gregory at Capital Economics said: \u201cThe rise in CPI inflation from 0.7% in March to 1.5% was almost entirely driven by energy price effects, which will only be temporary. We doubt a sustained increase in inflation that would concern the Bank of England will happen until late in 2023.\u201d<\/p>\n\n\n\n

By Simon English<\/em><\/p>\n\n\n\n

Source: Evening Standard<\/a><\/p>\n\n\n\n

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Inflation doubled in April and could do the same again by the end of the year, some economists warned today, as pressure grows on the Bank of England to raise interest rates. 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