THE DAILY TELEGRAPH: Mervyn King, the Governor of the Bank of England, has warned that inflation could remain high for the next two to three years, leading to a substantial fall in many people's real incomes.
With the average worker's salary forecast to tick up by little more than 2 per cent a year, unable to match the escalating the cost of living, millions of families will feel significantly worse off, experts warned.
Mr King's warning came as official data revealed that inflation, as measured by the Consumer Prices Index, climbed from 3.7 per cent in December last year to 4 per cent in January, the highest level for over two years.
The surging price of oil, petrol and the increase in the rate of VAT, which pushed up the price of alcohol and restaurant meals, were the main reasons for the jump.
The Retail Prices Index, a measure of inflation that many believe more accurately reflects the true cost of living because it contains housing costs, increased from 4.8 per cent to 5.1 per cent.
This is now the 13th consecutive month that the CPI figure has been above the Treasury target of 2 per cent, prompting Mr King to write a letter of explanation to George Osborne, the Chancellor. >>> Harry Wallop, Consumer Affairs Editor | Tuesday, February 15, 2011
THE DAILY TELEGRAPH: The Bank of England has been utterly and consistently wrong on inflation: stupidity or dishonesty? >>> Daniel Hannan | Tuesday, February 15, 2011