The UK CPI inflation figure has jumped from 2.5% to 3%.
The CPI figure is the official control target for the Bank of England which is required to maintain CPI at or near 2% using it’s primary weapon; interest rates. The BoE, however have been cutting interest rates in recent months causing Sterling to dive against the Euro.
The CPI figure is consistent of a basket of goods which is arbitrarily altered in an apparent attempt to engineer a low figure making it somewhat useless for continuous comparison. The RPI figure which is arguably more realistic yet still flawed jumped from 3.8% to 4.2%. As someone who actually has to buy food, oil, and necessary commodities (rather than ipods) in the UK, I would suggest that the real rate of inflation is somewhere between 6% and 10% and I’ve no shortage of people these days who will agree with me.
In this BBC article, some ’some analysts’ say that the high rate of inflation is caused by the high prices of oil and food and that raising interest rates would do little to control this inflation.
Ok, ’some analysts’, lets us say we cut interest rates; what then happens to the pound? That’s right, it falls against other currencies as the carry-trade legs it. Oh, look, the cost of oil and food of which we are net importers and must pay for in foreign currencies just increased. Congratulations, ’some analysts’ you just fueled inflation. 
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