February 22, 2009

Inflation is coming

Liam Halligan has a nice article in the Telegraph as to why we face lots of inflation. This is the key paragraph:

But UK deflation simply doesn't exist. In December, annual CPI inflation fell to 3.1 per cent – way above the Bank's 2 per cent target. That number was used as "evidence" we're on "the brink of deflation". Anyone examining this data could see the lower inflation rate was driven by the one-off 2.5 point VAT cut. Adjusted for tax, the CPI actually rose – from 3.9 to 4.1 per cent. That's not surprising given that our ailing currency saw import prices rise a painful 14 per cent. CPI inflation fell to 3 per cent in January. Again, the detailed data is instructive. Food price inflation hit 10.3 per cent. Even "core inflation" – excluding food and fuel – rose, despite the screams of "deflation" from Whitehall and beyond.


Blogger chris said...

Despite the problems with Israel's continuing occupation of part of the West Bank it is still a beacon of human rights compared to its immediate neighbors so I will not be signing a petition to have it dismantled.

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