Update: small correction on Adam Posen’s promise. Also, as several commenters have pointed out, a major factor in those high inflation numbers is the fact that Britain’s VAT didn’t just return to previous level; the Cameron government increased the rate from 17.5 to 20.

Inflation numbers continue to run high in Britain, yet the Bank of England, far from tightening, seems set to do more quantitative easing. Why are they so complacent about the inflation issue? Well, for good reasons.

Here’s the key graph, from the Office of National Statistics:

Like the US, Britain has no wage-price spiral — wages are going nowhere.

But in that case, why is headline inflation around 5 percent? The answer is a set of shocks we know are temporary. When Britain tried fiscal stimulus, it did so by cutting VAT; the expiration of that cut has raised prices on a one-time basis, which is still filtering through the system. Then there are commodity prices, which in Britain as elsewhere have given a one-time boost to inflation. Finally, there was a big depreciation of sterling in 2008, and as I understand it they believe that some of that is still filtering through.

So the Bank thinks that inflation will soon recede, and will probably be below 2 by some time next year.

And what you really should ask is, what would it mean for the Bank to try to reduce headline inflation right now? As Ryan Avent says, it would amount to demanding a squeeze that pushes down nominal wages. That sounds like a really, really bad idea.