Cover of MoneyWeek magazine issue no 517

Moscow calling

17 December 2010 / Issue 517

The best stocks to buy in Russia


  • Britain's big inflation problem
  • A bargain education stock to buy now
  • The most powerful man in British theatre


Britain’s inflation problem

“Expect jitters if the consumer price index (CPI) today is any higher than 3.2%,” said Patrick Hosking in The Times on Tuesday. The CPI duly came in at 3.3%. The retail price index (the one we used to consider to be the correct measure of inflation) came in at 4.7%. So jitters it is.

The Bank of England has long insisted that under current conditions it’s impossible for inflation to become a real problem. What with the low levels of lending and apparently high levels of spare capacity, they say, falling prices are more of a risk than rising prices. It doesn’t seem to be working out that way. These numbers don’t just suggest that high inflation is a risk. They show it is already with us.

You can blame it on tax effects, you can blame it on rising Chinese wages, or on the US quantitative easing (QE) binge. But what you can’t do, is pretend it isn’t happening.

• Read the full editor’s letter here:
Britain’s inflation problem

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