But oil and gas prices are not to blame for the latest jump in the inflation rate. The problem instead is runaway growth in the money supply, caused by record low interest rates.
London (PRWEB) April 24, 2007
The British public is being misled about what's driving the current surge in the cost of living, said a leading gold-market analyst today.
"Blaming energy prices is little better than a lie," according to Adrian Ash, head of research at BullionVault.com.
"First Tony Blair tried it, now Mervyn King at the Bank of England is trying it."
"But oil and gas prices are not to blame for the latest jump in the inflation rate. The problem instead is runaway growth in the money supply, caused by record low interest rates."
Ash's comments came after Mervyn King, governor of the Bank of England, told the Yorkshire Post today that inflation will fall back to the government's target "once this short-term volatility, brought about by a number of factors such as energy price increases," has diminished.
According to the government's own data, however, short-term volatility pushed energy prices downwards in March.
"Inflation in Fuel & Light has in fact been slowing since December," says Ash, "the longest sustained slowdown since the start of 2001.
"This latest jump in the cost of living – up to a 16-year record – comes instead from a surge in the cost of buying services and seasonal food. Both are primarily produced inside the U.K., showing that rising inflation is very much a domestic problem right now.
"If the Bank of England were honest, it would admit that it's kept interest rates too low for too long. That's driven a record surge in borrowing and created a surge in the money supply not seen since the top of the Lawson Boom in 1989.
"Annual growth in the supply of Sterling has been rising at a double-digit rate for the past two years running," notes Ash. "That's now serving to destroy the value of each Pound in our pockets."
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Adrian Ash, Head of Research
research AT BullionVault.com
+44 (0) 208 6000 134
Paul Tustain, Director
info AT BullionVault.com
+44 (0) 208 6000 130