Highest CPI inflation since 1993

There is much coverage of the latest spike in consumer price inflation with inflation heading beyond target range for only the second time since the Bank was made independent in 1997.

The Consumer Prices Index (CPI) rose by 3.3% in May, up from 3% in April and the wider inflation measure the Retail Price Index now has inflation running at 4.3%. You can read the Governor’s letter to the Chancellor here

What is striking for me is the surge in price inflation for goods with prices now rising at an annual rate of nearly 3%. Service sector inflation looks fairly stable at or around 4%. Eventually the scale of the cost increases have to feed through in whole or in part to the prices of tangible goods and the lower exchange rate may have also contributed to the steepness of the rise in prices at retail level.

Anyway here are some links to follow:

Inflation - what happens now (Independent)

Whatever you do, do nothing (Guardian)

Times archive back to 1975

Oil edges closer to $140 a barrel (The Times)

And before we all get carried away about the risks of a return to a new stagflation, it is worth reading this article by Roger Bootle which hints that - in perhaps less than two years time - the risks of price deflation might well be dominating the headlines once more as they did in the early part of the decade.