It is, perhaps, the nearest we’ve got so far to an admission from the Bank of England that things haven’t gone entirely to plan. Andrew Bailey, the Bank’s Governor, acknowledged last week that “some of the strength in core inflation…reflects second-round effects... And as headline inflation falls, these second-round effects are unlikely to go away as quickly as they appeared”.
Headline inflation will fall this week, courtesy of an unwinding of earlier energy price increases. Yet “underlying” inflation will still be uncomfortably high, courtesy of Bailey’s “second-round effects”.
