Tuesday, May 13, 2008
3% - almost a letter
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

Inflation jumped to 3% in April, from 2.5% in March, much worse than even the gloomiest analysts had expected. Given what has been happening to fuel and food prices, we should perhaps not be too astonished, though petrol does not seem to have been a big factor in the April numbers. Household energy bills were, as were food, alcohol, bank charges and furniture.

Perhaps we should not have been too surprised either given the producer price numbers, but the figures point to a difficult few months and the markets have already reacted. A June rate cut, which had been widely expected, now looks very doubtful, and last week's monetary policy committee decision is likely to have been clear cut against a reduction. Further details here.