Have to agree with the other two posts. Everyone knows true inflation is running at 5%+ More spin and lies from McLabour to hide the true state of the economy. The longer the denials and fudging of figures the worst the results will be long term. Brown worries more about keeping house prices stable than anything else. His GCSE level knowledge of Economics has not taught him there are more important things - inflation which if not tamed will reek havoc.

I see the Bank of England is now on the Gov't books along with Northern Crock. Dont be surprised to see Brown attempt against the advice of most businessmen to attempt to replace Mervin King with someone such as Blanchflower of Lomax who he thinks he can manipulate.

The USA has inflation much better controlled, and has a manufacturing industry to get itself out of trouble. We do not. Hold onto your seats it is going to be a bumppy ride.

Robert, Scotland,

So much for exports taking the strain. I find it incredible that the 6% devaluation tariff on all imports that the Bank of England engineered when it started cutting rates was not foreseen. Materials, components and energy are all subject to this 6% because our manufacturing at its most fundamental level is non-existent today. This story is an indictment of both the MPC and this government. If anyone cares to take a look there's something on why inflation may be the new government policy that dare not speak its name at: http://www.figurewizard.com/article.php/Bank_of_England_Rate_Cut_The_Pound_Falls__Inflation_Rises

figurewizard, Hampshire, UK

All our problems seem to have started since we allowed the Bank of England the freedom to do what they like.

Charlie, maidstone, uk

We don't seem to export too much these days so a higher interest rates will do two things:
a) increase sterling reducing imported inflation
b) but radically reduce the purchasing of non-essential consumer products
so our Balnce of Payments will adjust.

The other good result will be the free spending electorate can blame Brown and be gagging to kick him out soonest. Problem is Brown knows this and he'll want re-election at any cost.

Damian, Eastbourne,

So let me get this right: by maintaining or increasing interest rates this will curb inflation? Try telling that to the oil, gas and electricity suppliers who are the main offenders and whose price hikes are holding us all to ransom whilst they continue to make huge profits!

APM, Vienna, Austria

I second Raj's comments below. The PPI and import input prices have been awful for the last 3 months but during that period, CPI remained at 2.1%. Its so obvious the government is fiddling the CPI \ RPI figures to give the MPC room to cut interest rates. Remember how Mr Brown fiddled the tax rates (cut income tax from 22% to 20% in one hand and abolish the 10% rate on the first £2,200 on the other hand - so all we got was an illusion) or taxation by stealth, then fiddling the CPI figures is easy for Labour.

Peter Browne, Swindon, UK

This is hardly news. You'd have to be a hermit, freegan or MP living off expenses not to have noticed how much higher 'real' inflation is compared with fiddled government stats. As the remit of the MPC of the BoE is to control inflation, I can only assume that they are also on expenses, don't notice what things really cost and travel around with closed eyes so that they don't see all of those signs advertising fuel at well over a pound per litre. How else could they justify the REDUCTION in base rates???

Clive, Chichester, UK

How can inflation be kept under control with soaring fuel and food prices, and we want to stimulate the economy by igniting the housing market ..which is based on people taking out huge loans..Not an economist by any means but it doesn't seem to add up to me??

KGA, Frankfurt, Germany

All these numbers that cannot be "tweaked" (because they are based on global commodity prices) go IN much the same way that they do in all other places (EU, US, China etc) BUT in those other places prices come OUT (the CPI and RPI) quite high
Funny how when ours come OUT in the CPI and RPI at a much lower level. Are our product markets really more flexible than the US economy? Even including that country's bigger rise in oil (less tax so more impact from rising market prices) it all looks very odd
They have changed their goal posts to make controlling inflation easier, they rely on cheaper electronics in their basket to offset broader price trends (I call it fudging) BUT they still seem to end up with hogher CPIs
We should then trust the statisticians here? Incompetent (probably), career building by keeping the govt happy trhough fudging? (more likely)...not so much conspiracy as it is human nature...that is why every region in the Soviet Union used to grow by more than the average

Raj, London,

Exactly. Interest rates should have been held or put up last week.

DickW, Aberdeenshire, Scotland

Who are they trying to kid. Everyone on planet street level has been aware that inflation has taken hold over the last year. If the Government and BoE continue to ignore this we will have a sterling crisis and an abrupt reversal in interest rates. Interest rates need to be mainatined to retain capital in our financial institutions. However, we must discourage the consumer from throwing it away on imports and get the savers cash diverted into longer term real wealth creation.

Steve Marchant, Broadhempston, UK