Tuesday 18th July 2006
Mays inflation increase was expected, says Lloyds TSBs chief UK economist.
The increase in inflation shown by Office of National Statistics figures this week is unsurprising, Trevor Williams said.
The figures show that the Consumer Price Index inflation is at its highest level (2.5 per cent) since September 2005, following energy price increases, well above the two per cent target set by the government.
"We expected a rise in the annual rate of 2.3 per cent, we had it going up further in July. We are looking at inflation to peak at around 2.5 – 2.6 per cent," Mr Williams said.
The senior economist from the Centre for Economic and Social Research, Jonathan Said, has also said that the rise was unsurprising and cited rising oil prices.
"It will have an effect on household finances," he said. The cost of living is rising but it is harder for employees to demand higher wages because their bargaining power is reduced."
Like Mr Williams, Mr Said commented that an interest rate increase is expected soon. 
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