Would Stubborn UK Inflation Have Anything To Do With High Taxes?

Now why would UK core inflation remain stubbornly high? Anything to do with high income taxes, high business rates and high sales tax and government and local government fees slapped at every twist and turn? Plus government consistently over-paying for staff, services and vendors. What remains amazing is how the British press, including Conservative papers, seldom make the link.

The U.K.’s Consumer Prices Index has remained at 3.1pc for the sixth month running. Obviously there is a connection with higher international commodity prices – for example, cereals have gone up because of wheat price increases partly as a result of this summer’s forest fires in Russia.

But services inflation climbed to its highest rate since February 2009. It is now well above its low of 2.3pc in November. At least the Daily Telegraph noted that there might be a link with the upcoming jump in VAT (national sales tax). It quotes a retail expert, Neil Saunders of Verdict, suggesting that shops are already beginning to increase prices ahead of next year’s VAT increase to 20 percent.