Inflation Above Target

It is likely that inflation in the UK is likely to rise above the upper inflation target of 3% quite soon.

The main culprit is:

• rising oil prices (getting close to $140 a barrel) But also:
• Signs of inflation beating wage increases (e.g. striking shell workers get a good deal) BBC link
• Rising food prices
• Rising input prices (knock on effect of oil prices)

Mervyn King warns CPI inflation could even reach 4%.

He maybe quite busy writing letters to the Chancellor…