Shadow Chancellor George Osborne has just issued this statement:

“Gordon Brown’s economic reputation has gone bust. His years of boom and borrowing have left Britain ill prepared to face the double evil of rising inflation and falling growth. Today we got official confirmation of the rising cost of living. Labour’s boasts about low inflation and giving the Bank of England room for manoeuvre are now exposed. Yet instead of a government that helps people with a rise in the cost of living, Gordon Brown’s only plans to get us out of this economic mess are tax rises on family cars, alcohol, and council tax. These add to inflation and make the squeeze on family budgets tighter.”

His press release was accompanied by the following four arguments:

Inflation worst for sixteen years and accelerating: Bank of England Governor Mervyn King warned today, “Inflation is likely to rise sharply in the second half of the year, to above 4%… CPI inflation is likely to remain above the target until well into 2009”.

Households suffering most from inflation: In the last month alone, food prices jumped up 1.5%, energy prices jumped up 2.3%, transport costs jumped up 2.4%, the cost of air flights jumped up 9.4%.

Gordon Brown is in denial: On 8th January, the PM said: “With expected inflation low over the next period of time, it made it possible for the Bank to cut interest rates late last year."

The Government has no room for budgetary manoeuvre: The OECD recently diagnosed: “While ongoing economic weakness in 2009 would argue against fiscal restraint, the government’s options have been limited by excessively loose fiscal policy in past years when economic growth was strong.”