FTA says fuel duty rise caused inflation spike

The Freight Transport Association (FTA) has criticised the government for causing a spike in inflation with the continual rise in fuel tax. In January 2010, the UK inflation rate increased to 3.5% from 2.9% in December 2009. According to the Consumer Prices Index (CPI), this is the fastest monthly increase for 14 months.

In writing a letter to Alistair Darling¸ Mervyn King, the governor of Bank of England, blamed that the increase in petrol-price inflation is mostly due to the restoration of VAT to 17.5% . It had been at 15% since December 2008.

Communications Director at the FTA, Jo Tanner, said that the inflation has increased mainly due to the rising fuel prices to transport goods. Fuel accounts for above 30% of the entire transport cost, and these prices cause problems for the businesses and services that depend on the logistics sector to run easily.

Jo Tanner also said that it is an abhorrence to raise the tax on a tank of diesel during the recession, particularly when the real price of a barrel of oil has doubled.

The Road Haulage Association (RHA) met a week ago with the Treasury to call for decoupling of fuel duty.