As many of your have likely seen already, British inflation levels have again been rather high this past month (much higher than the BoE's target), which is continuing a trend of rising inflation. I find this rather startling since inflation in other major Western economies has been fairly subdued, and inflation expectations continue to be low (though they are much higher in England and rising).
I haven't had much time to think about this, so does anyone have an idea why this is the case? Britain is nearly first among the major developed economies to adopt serious fiscal tightening, and their monetary policy is tighter at least than US monetary policy. So why the increased inflation? It can't just be currency depreciation (though that likely plays a role) since the dollar and the euro are also under pressure. Commodity prices are part of it, but again other major developed nations haven't seen the same problems (though it seems likely a big part of China's inflation is likely due to commodities).
Anyone have any more insight? I would have expected this to happen to many other countries before the UK. What's really worrying is that inflation expectations are being driven much higher than normal, which is not good news, but I can't really see where things are going.
I know of a few other countries experiencing higher than expected inflation, but most of those are economies that weathered the crisis very well and are recovering faster than the rest of the developed world. Both Australia and Israel, for example, started seeing higher inflation earlier this year and clamped down on monetary policy as a result (though Israel has been trying to finesse their exchange rate by intervening in forex markets to keep the shekel low; contradictory policy goals must be a headache for Fischer). Hell, I don't know about Australia's economy well enough, but Israel's experiencing inflation to a large degree due to their own housing bubble in the works, which is completely divorced from global trends. But that's a very different story than England, where the crisis was much deeper and the recovery is slower.