Surge in UK inflation

The latest figures for consumer price inflation were far worse that expected. Consumer prices increased by 0.8% in April taking the annual rate of inflation to 3.0% - right at the top of the level allowed by the government as part of the inflation target. Both goods and service price inflation moved higher as the UK economy struggles under a series of cost-push inflationary pressures. I have attached a PowerPoint file showing some of the key inflation charts.

Setting rates is no longer kids stuff

According to Roger Bootle writing in today’s Telegraph. The MPC does face an acute dilemma with evidence of surging cost push inflation and the real possibility (probability?) that CPI inflation will overshoot the 3% ceiling at some point in 2008. But Bootle argues that if the MPC is too cautious over interest rates, fearing a return to a wage-price spiral, then we might well suffer the slump in real output and jobs that characterised attempts to put the lid on rampant inflation in the 1970s and late 1980s.

Revision: Inflation Targets and Measurement

Here are a couple of useful revision resources on inflation: