Household squeeze 'to worsen'

The Bank of England governor made clear today that the squeeze on household budgets will only get worse. Sir Mervyn King said he expected inflation to rise to three percent or more by the Ssummer and stay above target for another two years.

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Sir Mervyn King: Inflation is 'not out of control'

The Bank of England Governor has insisted that the rate of inflation is not out of control, despite the Bank's prediction that it will stay above the 2% target for the next two years.

He told ITV News' Economics Editor Richard Edgar that the higher rate of inflation is "not desirable" but that it would be better to tolerate it in "in the short term" than risk damaging the recovery.

Sir Mervyn King denies higher inflation is 'okay'

by - Economics Editor

Several strong themes emerge from the Bank of England's quarterly report.

Inflation is strengthening, but this has nothing to do with tuition fees or regulated energy prices.

When I asked Sir Mervyn King whether he is saying that higher inflation is okay, he said 'no' but added that it was better than taking it lower and risking killing off a recovery.

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ONS: Real wages have been falling since 2009

The average earnings of UK workers have been falling in real terms for the last three years and are now at 2003 levels, a new article from the Office for National Statistics has shown.

After inflation has been factored in, wages have been shown to be falling since 2009 Credit: Chris Ison/PA Archive/Press Association Images

After three decades of strong growth, real wages peaked in 2009 at £12.25. Since then inflation has outstripped wage increases, leading to real wages of £11.92 in 2010 and £11.41 in 2011.

This means that real wages have dropped by almost 3% between 2010 and 2012.

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