Mervyn King, the governor of the Bank of England, has declared the "nice decade" to be over. It might be accurate to state that the "nasty decade" is under way.

In spite of a US flirtation with recession, global inflation has both accelerated and broadened over the past few months. Inflation is no longer confined to natural resource and energy prices but has become virtually ubiquitous. The most recent UK data showed both goods and services inflation accelerating sharply, driving the retail price index index up 0.9 per cent on the month and 4.2 per cent on the year.