Greed

Britain's utility companies are to be congratulated on being even more greedy than banks, insurance and credit card companies, in their brazen fleecing of the consumer.

E.ON added its name to the list of shame by raising prices this morning, electricity up by 16% and gas by 26%.

Similar recent increases were imposed by EDF and British Gas.

Time that the sleepy old watchdogs, that are allegedly looking after the interests of the ripped off British consumer, to wake up and earn their pay.

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Crime and Punishment

Following last week's announcement by npower of an average 17.2% increase for gas prices and an average rise of 12.7% for electricity, Ofgem (the energy regulator) has tried to damp down fears of increasing residential gas and electricity prices.

Ofgem, in a response to a letter from Chancellor Alistair Darling, said that market forces (ie customers being able to switch accounts) would ensure that the consumer would not suffer unduly.

Quote:

"In Britain's competitive market some energy suppliers will be better at buying their energy than others and will be able to price at an advantage to their competitors,' Ofgem said.

Over the last five years we seen this happen and companies with high prices have been punished severely by customers. With customers switching at record levels this is set to continue."

This is all very well. However, it assumes that other energy suppliers will not follow npower's lead. Npower disagrees, and said that it expects other suppliers to "follow suit very shortly".

Darling and the government will be sweating in their beds, fearful of the effect that such dramatic price rises will have on the voters' perceptions of the effectiveness of their handling of the economy.

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Interest Rates Set To Rise

Yesterday's shock rise in inflation to 3.1% has sent a warning signal to the financial markets that interest rates are sure to rise, in order to try to tame the inflationary tiger.

The rise in inflation forced Mervyn King, Governor of The Bank of England, to write a letter of explanation to Gordon Brown, as its rate was more than 1% higher than the 2% target.

This was the first such letter in almost 10 years.

Mr King blamed the sustained rise in inflation partly on sharp increases in food, electricity and gas prices over the past year, but also on businesses discovering a greater degree of pricing power as the economy continued to grow.

Sterling broke the $2 barrier, for the first time since 1992, in anticipation of the rise in interest rates.

However, before savers rush to celebrate in anticipation of seeing their meagre returns on savings rise; they should be aware that banks are very happy to pass on interest rate rises to borrowers, but are remarkably recalcitrant when passing on benefits to savers.

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