The Telegraph, May 28, Roger Bootle
Last week’s inflation figure was an absolute stinker. You could have been deceived into thinking that it was good news because the headline rate fell from 10.1pc to 8.7pc, but this drop was solely caused by last April’s bumper increase in energy prices falling out of the annual comparison.
The villain of the piece was the core rate of inflation – which, far from falling back as some had hoped, actually rose from 6.2pc to 6.8pc. Nor can this be blamed on the current popular scapegoat, namely food prices. They are excluded from the core measure.
No, this was inflation pure and simple, experienced pretty much across the board, everywhere. What is going on?
The Bank of England formerly argued that the forces pushing up prices sharply were “transitory”. The same word was used by the US Federal Reserve. Both central banks were correct in this assessment of the impulse, but completely wrong in the conclusions they derived.
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