Labour left an inflation time bomb - and it's going off some time soon

Back in February I wrote this:

The Government’s strategy is to use inflation to reduce the impact of massive debt and to protect Labour’s key public sector voters. That’s why they printed £180bn in so-called “quantitative easing”.Inflation is 3.5% now. Expect 4.5% - even 6% - over the next few months. And watch the value of your savings shrink! Transferred neatly into the reduction of the real value of government debt. Let it rip!

Now read this report on a Policy Exchange study:

That boom would quickly run out of control, as the £200bn of "money printing" by the Bank during the crisis would lead to "a huge expansion in the money supply, which will lead to inflation". He estimates that the Retail Prices Index (RPI), the inflation measure favoured in wage settlements and against which annual rises in train fares are priced, would rise "above 10pc". The Consumer Prices Index (CPI), the inflation measure that the Bank is responsible for keeping at around 2pc, will top 6pc, Mr Lilico reckons.

Or if you think Andrew Lilico is a loony right-winger, this:

CPI inflation has exceeded the Bank of England's 2pc target for 43 of the past 52 months. The CPI remained at 3.1pc in July – forcing the Bank to pen yet another letter of explanation. Since 2007, despite the screams of the self-serving deflationist crowd, eight such letters have been written. In the latest, released last week, Bank Governor Mervyn King invoked the spectre not of falling prices, but of 1970s-style price rises, warning of the dangers of "destructive high inflation".

I told you so!

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