Analysts were shocked
by the surprise rate hike by the Bank of England last week. Now we know the reason for the surprise move. The BoE board had inside information
about the inflation numbers released to the public today. The numbers showed that consumer price inflation rose to 3,0% the highest level ever recorded with the EU-harmonized measure that was introduced in 1997, while the retail price index rose to 4,4%, the highest since 1991. More rate hikes might come soon, especially since a mere 0,1% increase in the year over year inflation would mean that BoE governor Mervyn King would be required to pen a letter to Tony Blair explaining why they've failed to keep inflation below 3% and what they intend to do about it.
The continuing collapse in the price of oil might save him from that, but non-energy inflation is clearly spiralling upward in the U.K.