DislikedTo be truly cynical, one should not rule out that this inflation is deliberate, and that it allows governments and big money to rape the citizen from behind. A large proportion of government debts is Sterling denominated, thus assisting in inflating the debt away via the theft from the saver - be this in savings accounts, pensions, commodities etcetera.
Much better to have a little inflation than to raise interest rates; which will have a very public effect, and be very damaging to many who are standing on, for example, the property precipice....Ignored
Keep rates low and the people can't afford to eat, put them up and they can't afford their houses.
To be honest the inflation coming through the food channel will be more manageable as the imported COGS is but a % of the total in store price. People can't afford to argue for higher wages because the job market is collapsing for anyone who's not in a decent role at a bank.
Loss of housing will be a lot more of a political problem than food in the near term. People in the UK still have cheaper substitutes that they can purchase, Iceland Frozen Chicken Pieces instead of Tesco's Finest etc whereas those in the Middle East/Pakistan and the rest of the third world having food riots are already buying the cheapest alternatives so they have no where to run.
They will continue to ignore inflation until it becomes a major public issue and the average punter here is still happy to enjoy a pint can and a jacket potato in front of Britain's Got Talent.
When the full impact of the NHS cuts, wider gov workforce cuts, VAT increase all come home to roost by mid year there will be a clearer picture on whether inflation is an issue in the medium term. If it is like last January's VAT increase though it will predominantly translate into margin compression as retailers try not to pass it on, however with the increases in raw material prices as well this may be the straw that breaks the camels back.
I can't make a case for prolonged GBP strength with the economy languishing like it is unless the retail consumer no longer matters in the UK.
I like your analysis style Condor. It's difficult to maintain focus when combining fundamental analysis with charting and you seem to be one of the few who can do it!