"You ain't seen nothing yet"?

This month's inflation indices showed rises, the CPI up to 3.8% (another letter soon from the Governor) and the more reliable RPI now 4.6%. With many salaries and pensions rising only by 2% or so, it is not difficult to understand why we are beginning to feel something of a struggle. Apparently both were restrained by a drop in the prices of clothing.

The Daily Telegraph calculates food/supermarket price indices, and for several weeks these have been at about 10%. On an annual basis it seems that 10.6% is the likely rise, with some foodstuffs rising much faster than that. We all know what is happening to fuel and energy prices!

Bottler continues his refrain, that it is all to do with outside forces. Some is - the stupid switch from foodstuffs to growing biofuels cetainly didn't help, and the EU clearly didn't think through their requirement that all fuel should have a percentage of biofuel in it!

But part of the explanation is the fall in the value of sterling, - over the past few years we have had the worst balance of payments on record. This was a Brown oversight. He was so keen to see the import of cheaper consumer goods which kept inflation low for several years, but his own splurge and the credit card spurge contributed to the weakening of sterling.

Could it get worse? The Office for National Statstics recently published firgures showing that factory gate prices are rising at 30%. These are yet to work through into the economy generally, as has the 20% price rise in imported goods. We could see even higher inflation rates, and all the problems as the strong trample over the poor.

There is little that the Government can do, given that it is so much in debt. We could have the scourge of inflation for a year or two yet. How will Brown explain this away when we come to the election?