In a recent article on Trading Floor, Nick Beercroft spoke wrote about the small inflation blip in the UK. He believes the recent above average inflation figures will fail to have any real affect on the decisions of the Bank of England's Monetary Policy Committee (MPC).

The slight rise of inflation is most likely related to the brief spell of sunshine enjoyed by London and most of the country recently, bringing out shoppers who had previously stayed away from the highstreets due to the terrible weather in May and June.

This increase in consumer activity may seem like an improvement in the economy, but is likely to be seen by the MPC as irrelevant to its medium 2% inflation mandate. Additionally, the Banks own inflation forcasts recently took a sharp downturn, so the report will do nothing to alter that view.

Beercroft believes that by next year, CPI will be reaching 1% and by next Spring worries of deflation will be in the headlines.

euroinvestor.com