UK Sees Record Jump in Inflation
According to figures released today the Consumer Price Index, the UK government's target measure for inflation rose by a massive 1% between November and December in 2009. This is the largest monthly increase on record.
The CPI now stands at 2.9% and looks set to go higher. The exceptional rise is a reflection of the drama of a year ago, when the teeth of the global recession bit almost to the bone. As a result, oil prices almost collapsed and retailers slashed prices to boost sales.
This increase in CPI was predicted along with an expectation that it will fall back later in the year. What's taken commentators by surprise in the size of the increase in a single month.
Inflation is more than just numbers. There's now increased speculation that the Bank of England will reduce or stop its process of pumping money into the economy through a device called Quantitative Easing. There are even suggestions that interest rates will begin to creep up sooner than expected.
The truth is it's too early to tell what will happen. There was so much government meddling in the economy during 2009 that it's not easy to tell what's real and what's not. People are trying to talk up consumer confidence but there's no evidence that it's begun translating into increased spending.
So, despite the exciting headlines generated by a record-breaking rise in inflation, the UK economy is still in 'wait and see' mode.