By David Milliken LONDON (Reuters) - Britain's government would risk being sued by bondholders if it made major changes to the outdated inflation index used to calculate their payments, Bank of England deputy governor Ben Broadbent told lawmakers on Tuesday. Britain's statistics office says the retail prices index (RPI), first introduced in 1947, is no longer a reliable guide to inflation and overstates the true rate of price increases measured by its consumer prices index (CPI). RPI inflation rose by 3.5 percent in the year to August, compared with 2.7 percent for CPI. But RPI continues to be used to set interest payments on new index-linked government bonds, student loans and in commercial contracts in the rail industry and some private pensions. BoE Governor Mark Carney said in January that the government should phase out issuance of RPI-linked gilts over the next seven to 10 years in favour of a measure like CPI. However, reducing the cost of the existing stock of inflation-linked … [Read more...] about Big change to UK inflation-linked gilts would risk legal challenge
Consumer prices index uk
LONDON (Reuters) - Average pay rises awarded by British employers grew more quickly in the three months to August after a short slowdown, according to a survey published on Thursday. The median pay award increase returned to an annual 2.5 percent, in line with the 12-month average, from 2.3 percent in the three months to July, wage data firm XpertHR said. "This follows seven years where pay awards hovered around the 2 percent mark," XpertHR said. The Bank of England is watching wages closely after it said domestic inflation pressures were likely to require further increases in borrowing costs, even as Britain's economy grows only slowly ahead of Brexit. XpertHR - which collects details of pay settlements for around 1,600 employee groups each year - said it sampled 91 pay awards in the three months to the end of August covering almost 1.4 million employees. The 2.5 percent increase roughly matched inflation over the three months to August, as measured by the consumer price index. Many … [Read more...] about Pay awards by UK firms pick up after brief lull
ECONOMICS can be a baffling science and one which can even stump the so-called "experts". This summer it was revealed UK inflation rose to its highest level in nearly six years, with some commentators putting this down to Brexit. But what actually is inflation? What is inflation? Inflation is defined as a general increase in prices and fall in the purchasing value of money. If inflation is 10 per cent, a handbag costing £50 will be priced at £55 in a years time. Whilst that sounds relatively simple, it is in fact one of the most important aspects of economics. It has a massive impact on people's wages and buying power which can really affect families bank balances. Inflation is also what the Bank of England uses as a guide when it is setting interest rates. The current UK interest rate has risen to 3.1 per cent - its highest level since 2011. How is it measured? Inflation is measured by the Office of National Statistics who collect the prices of more than 100,000 … [Read more...] about What is the current UK inflation rate, how is it measured, what does it mean and what effect does it have on prices and the economy?
News / UK and world by Press Association September 19, 2018, 9:49 am FacebookTwitterLinkedInWhatsAppEmail Sign up to our Daily newsletter Inflation grew more than expected last month, as higher price tags for transport, theatre tickets and autumn clothing raised pressure on household finances. Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) rose to 2.7% in August, compared to 2.5% in July. The data’s upward move was surprising given that economists were expecting inflation to edge lower to 2.4%. One of the largest upward drivers to price inflation was recreation and cultural services, which rose 2.2% month on month. It impacted upon the likes of theatre-goes, who shelled out more for entertainment in August. Transport services rose 4.6% last month, driven by a 13.5% hike in air fares and a 17.2% rise in sea fares including international ferry routes. Clothing also contributed to the upward move in August inflation, … [Read more...] about Inflation jumps as transport, theatre and autumn fashion prices rise
News / UK and world by Press Association September 19, 2018, 2:47 am FacebookTwitterLinkedInWhatsAppEmail Sign up to our Daily newsletter Inflation is forecast to have edged down in August after a drop in motor fuel costs helped offset a jump in food prices, according to economists. Consensus estimates predict the Office for National Statistics (ONS) Consumer Prices Index (CPI) of inflation will have dropped to 2.4% for August. That is compared to 2.5% in July. A rise in food prices is expected to have had the largest upward impact on UK inflation, according to Pantheon Macroeconomics chief UK economist Samuel Tombs. He pointed to recent reports from the British Retail Consortium showing that food shop price inflation rose to 1.9% from 1.6% in July, while Kantar Worldpanel also logged a rise. However, energy’s contribution to the overall inflation figure is likely to have held steady in August. While there was a slight rise in electricity and … [Read more...] about Drop in motor fuel prices expected to drag down UK inflation data