Mann: Asked on the slowdown in US prices impact on UK prices

Question: To what extent should the slowdown in demand in the US lead to a downside in prices and lead to downside imported inflation in the UK

Mann: It is true that imported inflation is important, but one thing we have noted is that the domestic components of inflation are becoming more apparent. UK goods prices are running around 4ppt above global goods pricing. If US prices slow, might see more decoupling of UK vs global goods prices.

When you have high inflation and you have another shock, this can lead to more persistent inflation expectations being higher. This could mean that the relationship between short-term inflation and medium-term inflation is stronger now than usual. Also inflation expectations from consumers (who buy food, energy etc) and financial markets. Need to be concerned about these expectations moving higher and driving medium-term inflation.