Against the backdrop of the spike in WPI inflation in January and the persistence in the hardening of consumer prices, this stance was reinforced in April. The combination of monetary, fiscal and supply management measures appears to have had a salutary effect on inflation expectations and from end-May there has been a distinct easing of inflation in terms of the headline.
Yet, inflation pressures appear to be ruling firmly. Excluding the decline in energy prices since February, WPI inflation continues to be above 6 per cent. Excluding food and energy prices, inflation would still be above the headline. Inflation in terms of consumer prices is still in the range of 5.7-7.8 per cent.