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Is the CPI giving a complacent picture of inflation?

The answer is no. Attention tends to focus on CPI, given that it is the measure of inflation targeted by the Monetary Policy Committee. And although yesterday’s data showed that CPI inflation rose to 1.5% in May from 1.2% in April, the rise was mainly accounted for by a rise in petrol price inflation from -0.6% to 8.2% - implying that underlying inflation remains subdued and well below the 2% target.

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