UK: CPI Inflation—Second Round Effects?
By Parul Walia
The UK’s CPI inflation was at 4% y/y in March 2011—compared with a trough of 1.1% y/y in September 2009. We attribute the high headline inflation to spikes in energy and commodity prices, tax rises and greater-than-expected pass-through from currency depreciation.
Although spare capacity in the UK is far[...]