Brits expect a rise in prices
THERE were further signs yesterday that Britain’s recession was at an end with data showing improvement in the housing market and rising inflation expectations for the coming year.
Figures from the Council of Mortgage Lenders (CML) showed mortgage approvals rising 16 per cent in April to 35,600, indicating more life in the housing market. But the number was still down 28 per cent on the previous year.
The Bank of England/GfK NOP inflation attitudes survey showed that Britons think the rate of inflation fell to four per cent in May, although consumer price inflation stands at 2.3 per cent while the retail price index remains below zero.
Britons also expect inflation to rise over the coming year to 2.4 per cent, compared to the 2.1 per cent expected in February, suggesting that more people are expecting a recovery.
But Howard Archer at IHS Global Insight said that the modest rise in inflation expectations in May does little to undermine belief that underlying inflationary pressures are muted.
Sterling rose broadly yesterday due to the inflation expectations data to hit a 2009 high at €1.1765, extending Wednesday’s gains.
Market optimism was boosted further yesterday when a G8 source said the IMF had raised its global growth estimates for 2010 to 2.4 per cent from 1.9 per cent in April because of the stimulus measures.
However, not everyone was so positive about the scale of the stimulus, which has seen the UK’s fiscal deficit widen substantially. Richard Lambert, director-general at the Confederation of British Industry (CBI), told business leaders last night that politicians need to get a grip and urgently address the long-term problems facing the country, including rising government debt.