It’s probably not the figures George Osborne wanted to see published the day before his Budget, although they could have been worse.
The latest price inflation figures from the Office of National Statistics show the Consumer Prices Index (CPI) measure of inflation rose from 2.7% to 2.8% for the twelve months to February.
This is the highest rate of CPI inflation for nine months.
At 2.8%, CPI remains well above the government target of 2%; it has consistently exceeded the target since the onset of the global financial crisis.
Domestic energy bills and fuel costs are contributing to this stubbornly high price inflation.
What these figures could trigger is a review of the Bank of England, to be announced during the Budget tomorrow.
Osborne is thought to want to give the Bank a duty to target not only inflation but also economic stability.
Such a review would coincide with the departure of Bank of England governor Sir Mervyn King, who warned last week that a return to high inflation could be ‘scary’.
In a television interview, King warned that the Treasury should not water down their commitment to a low inflation target in the Budget this week.
Balancing the need for low inflation with the ability to sustain healthy economic growth is proving to be a real challenge for the Treasury and Bank of England.
Too much economic stimulus, particularly in the form of quantitative easing, could stoke existing inflationary pressures and further weaken Sterling.
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