Bill Mott: Is the inflation genie out of the bottle?

BILL MOTT ON INFLATION

Bill Mott, manager of the PSigma Income fund, considers the outlook at home and abroad in the face of upwards inflationary pressures.

Ugly headlines Earlier this month, the UK inflation figures for December 2010 created a serious pause for thought. The broad RPI measure came in at +4.7% year-on-year and the government's preferred measure CPI (which excludes mortgage interest payments) +3.7%. The latter was significantly ahead of expectations of 3.4%, and miles ahead of the Bank of England's target of 2%. The key question for all investors now is whether the inflation genie is out of the bottle and whether we should prepare ourselves for a period of higher inflation. The Bank of England's answer is no. In defence ...