Are we now heading for stagflation?

Despite the recession, inflation remains stubbornly above 2%, leading to fears of interest rate rises and a cutting back of the Bank of England's 'quantitative easing' programme.

For the 11th time in 14 months, inflation has beaten expectations. In May, the annual rate of consumer price inflation (CPI) fell to just 2.2% from April's 2.3% as food and energy prices eased. Core inflation stripping out food and energy edged up to 1.6%. Meanwhile, retail price index (RPI) inflation, which includes mortgage costs, eased from 1.2% to 1.1% on rising mortgage rates.

What the commentators said

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