The Monetary Policy Committee is not inclined towards consistency and has a habit of choosing what may be regarded as a pressure point, only to drop it when it proves to have been an exaggerated concern. The market expects to see a divergence of 4.35% between prevailing short-term interest rates and the CPI inflation level towards the end of this year. If this happens, it will be the highest level of real interest rates since 2001. The consumer is starting to be less vigilant on price increases. Over the past decade every time that manufacturers and retailers have tried to increase prices by more than an amount justified by the inflation rate, consumers have gone on a buying strike.
