From the FT:
"Worse for the Bank is that its inflation forecasts have been far too optimistic. As recently as last February, the rate-setting monetary policy committee thought inflation at the end of 2010 would be 1.5 per cent. Economists have thus begun to question the independent central bank’s credibility in battling price rises. Michael Saunders, of Citigroup, says the MPC’s members “perhaps reluctantly are likely to have to shift focus, from an all-out emphasis on stimulus to a greater emphasis on keeping inflation on target and showing they take the inflation target seriously”...
The spike is particularly worrying because the impact of food price inflation usually goes beyond its weight in official inflation measures. Analysts say rapid rises in the price of staples such as bread have a broader psychological effect on consumers, who tend to associate these with wider increases in inflation. As such, a jump in food prices could push up long-term inflation expectations."
