Currency watch: Price rises dominate pub chatter

Maybe it’s just me but the summery weather may have gone to some people’s heads. Actually, it’s probably more about people forgetting about the economic situation and getting sloshed on a Saturday afternoon in the sun.

Last weekend I found a common string of conversations between the patrons in the beer garden surrounded the seemingly unending rise of prices.

The thing is that we all just need to get used to it. Most if not all agricultural commodities are on the rise and are likely to continue to do so as long as supply and market pressures remain, and that will inevitably hurt you and me more than it does the companies.
 
This throws the subject of interest rate rises into sharp focus. The headline increases in the Consumer Price Index have of course made the headlines. This is no surprise given that, at the latest reading, inflation in the UK is still double the Bank of England’s target of 2%.

The problem is that a Bank of England rate rise would probably have very little impact on prices, as most of this inflation is imported from abroad.

This deference to consumer concerns as opposed to inflation is what is keeping pound depressed at the moment. And as the Monetary Policy Committee is not expected to raise rates until August at least, this continued weakness from the consumer sector will keep its fingers off the trigger throughout the summer.
 
Jeremy Cook, chief economist at World First foreign exchange, 21.04.2011