UK inflation stubbornly high after surprise rise in air fares, clothes, food


From The Telegraph, London
Tuesday, September 14, 2010

British inflation unexpectedly remained above 3 percent for a sixth month in August, after surprise rises in airfares, clothes, and food prices offset falling petrol costs.

Britons who decided to take a summer holiday abroad faced a 16pc rise in air fares between July and August, especially on European and long-haul routes.

The rise is a record for the period, the Office for National Statistics said.


Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource

Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen.

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Economists had expected annual CPI inflation -- well above the Government's 2 percent target -- to fall to 2.9 percent but it came in unchanged at 3.1 percent.

Inflation was also pushed higher by a jump in the cost of clothing, particularly women's outerwear. The 2.8 percent rise from July to August is the largest for the period since 2001.

While higher wheat prices after shortages created by fires in Russia and floods in Pakistan this summer started to feed through into bread and cereals.

This offset falling petrol costs and second-hand car prices over the month -- in contrast with a steep rises a year earlier -- to keep held CPI inflation flat over the month.

Brian Hililiard of Societe Generale said: "Rather disappointing. I'm not too worried about the volatile items, in particular food, which is a genuine upturn but may not be sustained. The rise in core inflation is more troubling."

Core inflation rose from 2.6 to 2.8 percent -- consensus was for a fall.

"Clearly it plays to the hawks [on the Bank of England's Monetary Policy Committee] rather than the doves but it's just one month's number," Mr Hilliard said.

Andrew Sentance, one of the Bank of England's rate setters, has been calling for a rate rise for months.

Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said: "Today's figures will add to the tensions amongst some MPC members about the current level of inflation and the potential for it to become entrenched in people's expectations."

The Bank of England has forecast that inflation will average 3 percent in the third quarter but expect is to fall toward the end of the year.

Philip Shaw of Investec said: "Overall inflation is stubbornly high and the impact of higher wheat prices has yet to exert itself fully on CPI figures ... The Governor [of the Bank of England] would be well advised to keep his pen out on his desk given that he'll have to write more letters to the Chancellor."

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Sona Resources Expects Positive Cash Flow from Blackdome,
Plans Aggressive Exploration of Elizabeth Gold Property

On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia.

Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013."

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A Canadian gold opportunity ready for growth