In the United Kingdom inflation is falling marginally to about 5%. Many economists think that by late 2012 UK inflation will be below 2%. The simple explanation is that the very high inflation is largely due to high fuel prices, but has been mitigated to a small extent by lower food prices, lower air fares and lower petrol prices. I understand the simple explanation but there is a more complicating factor which the economists are ignoring. The so called quantitative easing has injected many hundreds of millions of pounds into the economy. That money must, inevitably, result in inflation. No one seems to address the point of  how that will affect inflation. Continue reading