Policymakers must wake up to the significance of higher inflation coming through the pipeline

fruit and veg
Food and energy prices have been rising – turning round the falling price trend we saw in 2014 and 2015 Credit: Getty

UK inflation has been picking up in recent months, rising from close to zero early last year to just below the 2pc Bank of England target.

An increase in inflation was expected following the impact of the Brexit vote on the value of the pound – which has dropped by around 20pc against the dollar and around 17pc against the euro since mid-2015.

But higher inflation is something which has been experienced not just in the UK but across Europe and in the United States.

The rise in UK inflation over the past twelve months – from 0.3pc to 1.8pc - has been exactly the same as in the Eurozone.

In the US, the headline inflation rate has risen from  1.4pc to 2.5pc since last January. So our rise in inflation has not been unusual in the current international context.

Two related common factors have pushed up inflation in the UK, the rest of Europe and in the US. First of all, food and energy prices...


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