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Stagflation fears return for Budget
Dan Atkinson, Financial Mail
21 March 2010, 11:37am
Higher prices and stagnant retail sales look set to provide a sombre backdrop to Wednesday's Budget.
Stagflation: Consumer demand has tailed off
Although the recent surge in inflation has eased, February's data, due on Tuesday, is expected to show the Consumer Prices Index running well above its two per cent target.
The broader Retail Prices Index is set to show an even bigger jump in the cost of living.
Meanwhile, February's retail figures, due on Thursday, are expected to show the volume of sales as static.
'These figures have tended to disappoint quite significantly in recent months,' said Peter Dixon, strategist at Commerzbank. 'The trend seems more or less flat. Consumer demand seems to have tailed off.'
This combination raises the spectre of 'stagflation' - stagnation in the real economy and rising prices.
However, the Bank of England's Monetary Policy Committee has said it considers rising prices to be a temporary problem.
Dan Atkinson, Financial Mail
21 March 2010, 11:37am
Higher prices and stagnant retail sales look set to provide a sombre backdrop to Wednesday's Budget.
Stagflation: Consumer demand has tailed off
Although the recent surge in inflation has eased, February's data, due on Tuesday, is expected to show the Consumer Prices Index running well above its two per cent target.
The broader Retail Prices Index is set to show an even bigger jump in the cost of living.
Meanwhile, February's retail figures, due on Thursday, are expected to show the volume of sales as static.
'These figures have tended to disappoint quite significantly in recent months,' said Peter Dixon, strategist at Commerzbank. 'The trend seems more or less flat. Consumer demand seems to have tailed off.'
This combination raises the spectre of 'stagflation' - stagnation in the real economy and rising prices.
However, the Bank of England's Monetary Policy Committee has said it considers rising prices to be a temporary problem.
