Problem of inflation
- 17 Jun 08, 10:25 AM
Most people didn't need the governor of the Bank of England to tell them that inflation is a problem. For months now, people have been able to see for themselves - in their fuel bills, the price of the pumps and the cost at the supermarket.
Today's inflation stat and that letter however, do mark the return of inflation to the centre of British politics. Due anytime soon, a debate about how best to sort it and who is best placed to do it. Downing Street these days is full of briefings and discussions about the price of oil. Look hard at Gordon Brown's rhetoric and you can see a real change.
Yesterday the prime minister described the trebling of world oil prices as the most worrying situation in the world. Last week he talked of ending the globe's addiction to oil. This Sunday he travels to Jeddah, the capital of Saudi Arabia, for a summit with the king.
What's his aim? It is not a short-term increase in the supply of oil and therefore a cut in petrol prices, we're told. It is, instead, to reduce the significance of speculation in oil by City commodity traders.
He hopes that if the long-term supply of oil is more certain - a question for the producers like Saudi Arabia, and if the long-term demand for oil is more predictable - a question for the Chinese and the Indians - that then there will be less cash to be made from speculating on oil price hikes, speculation that can lead to actually increases in prices.
This is classic Gordon Brown, wrestling behind the scenes with something he genuinely believes is a major long-term problem. It will be fascinating to see what progress he can make in the weeks to come.
PS. Many people have been baffled by President Bush's banter with me at yesterday's news conference about whether I had a hat. Without going over very old ground you can click here to watch when the president's made a gag about my baldness before.
