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Am I missing something?
We may be facing interest rises in the near future. The government say that this is because inflation is too high after a sudden jump in december.
Okay - now the inflation is due to higher prices of fuel and food. These are essentials and people have to eat and travel to work/deliver goods etc. It's not like we are all going out and buying 42'' plasma TVs (you're not are you?)!
So, how will putting up interest rates help? Surely the effect on anybody with a mortgage is that they'll have less money to spend each month? But we'll still have to buy petrol and food.
Less money overall but still having to spend the same amounts on the very things pushing up inflation means that people will spend less on other 'luxury' items. So if you are selling plasma TV, new cars, digital cameras, houses etc, this is also bad news. The economy begins to stall and we are back in a recession?
Am I missing something?
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