Business

Cameron 'not happy' with high inflation

  • 30 October 2011
  • From the section Business

Prime Minister David Cameron has told the BBC he is "not happy" about high inflation and has "every sympathy" for families struggling with tight budgets as prices continue to rise.

But he said the Bank of England believed the factors behind price rises were largely temporary and external.

He said it was up the Bank to ensure the inflation rate fell back.

He added it was important the European single market was protected as eurozone members looked towards closer union.

'Rising prices'

"I am acutely conscious that families up and down the country have tight budgets," the prime minister told the BBC's Andrew Marr Show in Perth, Australia, where the heads of the Commonwealth states have been meeting.

He said a weakening sterling - which makes imported goods more expensive - and higher food prices were two factors behind the rising inflation rate, which currently stands at 5.2%, as measured by the Consumer Prices Index.

This is the highest CPI reading since the measure was introduced in 1997.

Measured by the Retail Prices index, which includes mortgage interest payments, inflation stands at 5.6%, the highest since 1991.

Mr Cameron said that while it was the Bank's job to control inflation, the government had frozen council tax payments and cut fuel duty to help combat rising prices.

'Proper protection'

The prime minister also stressed the importance of the European single market.

Many observers have suggested closer monetary and fiscal union is the only way to prevent another debt crisis similar to the one that has undermined confidence in the eurozone economy and destabilised global financial markets.

"As the eurozone countries go ahead, as they must, trying to co-ordinate and combine more, I think it's right that those countries not in the euro ask for some arrangements and guarantees that the single market is going to be properly protected," Mr Cameron said.

"There is a concern that because the 17 [members of the eurozone] are going off and doing more together, that could impact badly on the single market. We need to stop that from happening."