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Sunday, October 15, 2006

Is inflation increasing in the UK?

I had a look at recent UK CPI data and made a simple forecast. The data is monthly annualised CPI rates from the ONS. The most recent data point is August 2006.

The model is a simple AR(12). As the graph shows CPI is predicted to increase and reach the 1988-2006 mean of 2.7%.

Can the oil price be the underlying factor?

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