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City Verdict On Inflation Data: "unexpected Surprise"

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UK inflation: market reaction
Marc Ostwold, Monument Securities:
"It's an
unexpected surprise
, with all the pressures showing up it could have been worse than this. This does not bode well when we've got a VAT rise to be absorbed as well. Only some of the extra costs are being absorbed by retailers.
"Even if Charles Bean thinks a sharp slowdown would justify more QE, on the current picture of inflation it does not look like it is going to give them the scope. Inflation expecations are only going to be driven higher by figures like this."

IMO its still deflation LT.

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I'm surprised that people are still feigning surprise at the inflation figures!

In a way it's good though - it makes QE2 much harder to justify and could even raise rates in the early part of next year, both of which would be good.

Who says they have to justify it (properly justify it, that is).

They'll do what they did last time and make up some specious 'reason' that sounds semi-plausible to the mostly financially retarded population, then go ahead and do it to a fanfare of praise from the corporate media.

The markets won't complain - more money means higher asset prices and stock markets equals bigger profits for all concerned - and the the big boys who make the markets get first bite at the freshly baked cash and hence can grab a bigger share of the real world cake with it, before the resulting debasement effect kicks in.

Everyone's a winner, except of course the sheeple who will be left wondering why the cost of living continues to soar skywards even as the economy stagnates.

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