Tuesday, November 16, 2010
Take another letter Mr King
Posted by David Smith at 09:40 AM
Category: Thoughts and responses

The October inflation data came in close to expectations, with consumer price inflation remaining in the "letter-writing" range at 3.2%, up from 3.1%, and retail price inflation at 4.5%, down a whisker from 4.5%. We know from the inflation report what Mervyn King will say in response, in his letter to George Osborne.

Though the latest monthly numbers were boosted by higher petrol and diesel prices (though helped by lower food prices) inflation looks pretty well locked in at just over 3%, ahead of the January VAT hike. The Bank may take some comfort from the fact that CPI inflation excluding indirect tax changes is 1.6%, and just 1.4% at constant tax rates. More here.