Can’t blame UK government for inflation now

May 17, 2011

A fair amount of UK inflation has been self-inflicted. As CPI and core CPI have risen since late 2009, CPIY (which strips out inflation from new taxes and the like) has stayed relatively low — one reason, perhaps, why the Bank of England has ┬áremained somewhat dovish.

Tax rises, in other words, have been behind a lot of UK inflation.

This is changing however. CPIY is still 150 basis points below CPI, but at 3.0 percent it is some 160 basis points above a low last July. So you can no longer blame the government. Underlying prices are rising anyway.

 

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    "Chief Desk Editor, Economics & Markets, based in London. Previously European Investment Correspondent, Bureau Chief for Greece and Cyprus in Athens and Senior Correspondent for the European Union in Brussels. Began career covering U.S. politics in Washington D.C."
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