14/06/2011 World Business Report

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World Business Report is next. You are with World Business Report.

Our headlines: Rising prices as Britain's does -- Britain discovers

a weak economic growth. China's inflation dilemma as Consumer Price

Index reaches its highest level in three years. Is it time for the

central bank to act? And in Japan, the price of Tokyo Electric Power

stores after the government approves the compensation of people

affected by the nuclear crisis. When to act on inflation? That is

the problem facing the world central banks who have to control

price rises without taking the wind out of their fragile economic

recovery. The dilemma is back in focus this week with several major

inflation data. The UK is expected to confirm its Consumer Price Index

blue above the target for the 18th straight month in May.

Britain's cost of living is going up. It is rising faster than in

most other developed economies. The main measure of inflation, the

Consumer Price Index, stood at 4.5% in April, its highest in two-and-a-

half years. Compare that to the neighbouring eurozone, where CPI it

was significantly lower at 2.8%. And in the US, prices are also

rising slowly. The same a month's figure was 3.2%. Even allowing for

slight differences in the way CPI is calculated, inflation is clearly

higher in the UK. But why? The Bank of England Express has three key

factors that have been driving inflation. One is commodity price

rises which all countries have been faced with. The UK has also been

specifically problems by the rise in VAT. And also the weakness of

the British pound which has fallen by almost 30% against many

currencies. That means the price of imported goods and services has

gone up by almost 30%. So tax hikes and a weak currency are driving up

inflation in Britain, on top of the food and oil price increases faced

by the whole world. That has been felt in people's pockets. It is

enormous. I have noticed the cost of petrol and gas and electric rise

cutely. The Bank of England does care about rising prices, that is

its job. But it is more concerned about the fragile economic growth.

So interest rates are likely to stay low. For now, at least, until

there is an indication the economy isn't a sounder footing.

The UK is not alone. China has had its inflation data out and we will

look at that later. First, shares in Japan's energy company Tepco

have been soaring today following a torrid few months for the operator

of the tsunami hit Fukushima plant. It follows news that Japanese

government has approved a law to help Tepco compensate victims of

the disaster. Lovely to see you. What is going on? Welcome back.

Thank you. What is going on? Some good news. Finally, Tepco has its

currency each soaring -- currency soaring, it jumped as much as 18%

after the government approved a scheme to help compensate people

affected by the nuclear crisis. The governed initiative calls for this

new body to be set up to help the compensation to residents who were

forced to evacuate their homes around the facility. Under the plan,

Tepco will have to pay back all funds it receives from the

organisation out of future profits and will sell assets and implement

tough cost-cutting measures. Analysts say this of will result in

higher power rates. Tepco and other companies are likely to bump up

costs being -- charges. They are expected to reach several trillion

yen. Despite all of this enthusiasm, the trade minister says this has

not been sealed and delivered. The bill still needs to be passed by

Parliament. The current parliamentary session is scheduled

end on 22nd June but is expected to be extended to discuss a

supplementary budget programme. They are hoping this Bill will be

passed and signed by the end of the June - up by the end of June.

you. The International Monetary Fund has

announced its official shortlist of two candidates to take over. First

is Christine Lagarde. Her rival is the head of Mexico's central bank,

or Agustin Carstens. The surprise applicant, Stanley Fisher, will not

be considered. He is 67 and they rule a -- he used not suitable.

Sales have gained consoles and the video games are fell last month to

their lowest level in nearly five years. The data was compiled by a

group who say this is partly because fewer games were released

and gamers could be diverting their cash to more online contact.

Fiat has taken a stake in Chrysler to more than 50%. Will it buy up

the rest? Can have the company swallow a rival? It makes as many

cars in America as it does in the rest of the world. We have this

report from Rome. The chief executive of the company gave a

rare interview about his intentions for Chrysler. That is an open issue.

The only objective is to find the requirements of fear at first. All

options are on the table. But the ad will still be controlled from

Italy? -- Fiat. Three I have no intentions of moving the

headquarters. We need to find a solution to corporate governance.

It is a larger car maker. They make many more cars than us. It is an

interesting dilemma. We will know how to deal with it in the right

time. The important thing to focus on is making money. Do you think

Americans want to buy a small cars? Americans want to buy fuel

efficient cars. If you spend enough time understanding the work we've

done and other competitors as well in improving efficiency.

That was the head of Fiat. As promised, more on Chinese inflation.

It has picked up pace. It is the world's second largest economy and

may need to raise interest rates again to further slowdown this

trend. New figures from the CBI say inflation figures rose by 5.5%.

When taking a look at a look at ned in the factories, today's

industrial output figures show growth at 13.3 %. It has now slowed

for three months in a row. Let's quickly flagged up the other

inflation data. India have's headline rate continues to soar.

Economists forecast a small rise today so keep an eye on India. On