Why is CPI Inflation So High? - speech by Paul Fisher

On a recent visit to Liverpool, Paul Fisher – Executive Director Markets and member of the Monetary Policy Committee – spoke about the factors that had combined to push inflation above the Bank's target and set out what in his view was the appropriate monetary policy response.
Published on 29 June 2010

Paul Fisher begins by noting that “...it was the stability of price inflation between 1993 and 2007 that was unusual, not the recent volatility which has been quite mild compared with the pre-nineties experience”. He says that the most recent spike in inflation has been particularly surprising given that it happened against the background of a deep recession: “One might have expected a recession of this depth to exert considerable downwards pressure on inflation – such that the current CPI inflation rate could easily have been negative.” So why is CPI inflation so high? Paul Fisher says it reflects two sets of factors.

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