I expected more

Today's inflation number really should have been a lot lower. With the banking system imploding, and the real economy in freefall, prices should be coming down.

The December number came in at 3.1 percent. It should have been much closer to 2 percent. After all, we did see the 2.5 percent VAT reduction, massive pre-christmas sales, and the collapse in oil prices. Really, I was expecting much more.

So why didn't the inflation rate fall further? I am going to guess that the sterling depreciation is beginning to feed through the supply chain.