Initially the main drivers of this adverse trend were food and petrol, but more recently there has been evidence of a more generalised upward trend in inflation, including that of services prices. The Monetary Policy Committee (MPC) responded to these developments by raising the repurchase rate by 50 basis points in June 2006, the first increase since 2002.
This was followed by successive increases of 50 basis points at each of the subsequent three meetings of the MPC in 2006. By December the repurchase rate had increased to 9,0 per cent per annum. The pressures on inflation emanated from both international and domestic sources.