We ignore inflation “at our peril”

| January 20, 2010

Inflation figures for December are “worrying” and should be “ignored at our peril”, a financial expert claimed this week.

The Consumer Price Index rose from 1.9% to 2.9% in December, while the Retail Price Index jumped from 0.3% to 2.4%.

David Kuo, director of financial website fool.co.uk, said the dramatic “surge in inflation” is “unlikely to be the last”.

“These are not statistical anomalies that we can casually wave away but represent a real dent in the purchasing power of the pound in our pockets,” he said.

VAT’s return to 17.5% is likely to “stoke inflation further”, Kuo added.

According to Kuo, the Bank of England is powerless to control inflation.

“The use of crude macroeconomic tools to control something as stubborn as inflation is tantamount to fine-tuning a watch with a shovel,” he said.

Kuo recommends investing money in stocks and shares to combat the effects of inflation.

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