G7 inflationI’ve been saying for ages that deflation isn’t an issue in the UK, and now that inflation is rising again, it’s clear that we never even got close, and if it hadn’t been for the temporary VAT cut, inflation would have been even higher.

There’s an excellent blog posting in the Coffee House about why inflation will continue to rise, and why that is a problem. Do read it!

Update: See also Cynicus’s take on this.

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