| Inflation at 11-year high of 3.8% |
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Rising food and fuel costs pushed UK inflation up to an 11-year high of 3.8% in June from 3.3% in May, figures show. The rise means inflation is now well above the government's 2% target, and may reduce the chance of a UK rate cut. The Bank of England, which has already said inflation may top 4% this year, has to balance the need to control inflation with worries over growth. The RPI inflation measure - often used as a benchmark in pay negotiations - rose to 4.6% in June from 4.3% in May. Restraint Commenting on the figures, Chancellor Alistair Darling called for wage restraint in order to help rein in price growth. "We saw what happened in the past when inflation got out of control and people found that every penny they got in a wage increase was swallowed up by food and fuel prices going up," said Mr Darling. "Whether you are in the private sector, or public sector, whether you are sitting in the board room or working on the shop floor, we cannot allow inflationary wage increases because that would mean that everyone, especially people on lower incomes, would suffer," he said. But the high inflation figures drew criticism from the Conservative and the Liberal Democrats, who questioned Mr Brown's effectiveness in his former role as chancellor. "Inflation is now more than double the rate that Gordon Brown inherited from the last Conservative government," said shadow chancellor, George Osborne, who also accused Mr Brown of "shrugging his shoulders" over the economic woes. Liberal Democrat Treasury spokesman Vince Cable said the data proved Gordon Brown had lost his focus while chancellor. "Gordon Brown is now facing the consequences of years of inaction over spiralling personal debt and the unsustainable bubble in the housing market," said Mr Cable. "The Prime Minister bases his credibility on his economic record, yet it is now becoming startling clear he was asleep at the wheel." Cheaper clothes Food and non-alcoholic drinks were the main factors fuelling the rise in inflation, with prices increasing at a record pace of 9.5% in June from the same month a year earlier. When compared with May, food and non-alcoholic drinks were 2.1% higher. Meanwhile, surging oil prices have driven up the cost of fuel with the average price of petrol increasing by 5.3 pence a litre. One positive for consumers during the month was a drop in the cost of shoes and clothes as retailers cut prices in an attempt to attract more business. Continued... |
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