Are the inflation figures worrying?

Today's inflation figures are extremely worrying. The predicted fall by somewhere between 0.6% and 0.8% was exaggerated and the real fall was a mere 0.1%. With all the reductions in interest rates and home loans, that is not a great reduction. The CPI has actually gone up from 3.0% to 3.2%.

The recession should be having a large downward pressure on inflation, but it is not happening. The Governor of the Bank of England, Mervyn King, has cited the 28% devaluation of Sterling as a factor in the reduced effect of the recession on inflation. So are we in for a period of stagflation? Inflation with stagnation.

Stagflation would be the worst situation to find ourselves in. Unfortunately, our burgeoning debt & printing money policies will probably have a further depreciation on Sterling leading to continued high inflation. Stagnation seems to be the next stage in this economic cycle.

Squiffy.