Economics and inflation someone please explain

[Adrian W]

Inflation is now RPI 4.8% CPI 3.7%, there is now lots of talk about controlling inflation with an interest rate rise, the government will say its nothing to do with us, its the monitory policy commission and the way to cool the economy is to raise the base rate so people spend less. but! the primary reasons given for the high inflation is the government's policy's of fuel duty and VAT, then increases in the cost of food. So the government control the prices, but inflation is nothing to do with them, but if we spend less and don't ask for a pay rise to cover it things will be OK, but if we spend less we will go back into recession.

Am I missing something?

[Dogwatch]

Inflation has everything to do with the government whatever the political hue. A convenient way of paying off its debts mainly, and gullible OAPs like it because their pension goes up by x% ignoring the fact that the RPI has gone up by the same percentage.

I remember a 70's newsreader announcing that annual inflation had reached something like 22%, so still a way to go before we start carting notes around in wheelbarrows.

[munky]

Adrian W said:

Inflation is now RPI 4.8% CPI 3.7%, there is now lots of talk about controlling inflation with an interest rate rise, the government will say its nothing to do with us, its the monitory policy commission and the way to cool the economy is to raise the base rate so people spend less. but! the primary reasons given for the high inflation is the government's policy's of fuel duty and VAT, then increases in the cost of food. So the government control the prices, but inflation is nothing to do with them, but if we spend less and don't ask for a pay rise to cover it things will be OK, but if we spend less we will go back into recession.

Am I missing something?

pretty much spot on, except that inflation was already running way above target for many consecutive months before the VAT and fuel duty rises.

The BoE has one very blunt weapon to control inflation, and as you say it doesn't have any impact on tax rises or globally set prices like oil and food. So if they raise rates, the danger is that it has no effect on inflation yet hammers people twice because of mortgage payments going up