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  Inflation has just had its biggest monthly increase with the CPI rising to 3.7% and the RPI to 4.8%.
  
  Lets be clear what we are talking about when we refer to inflation. Common parliance has led it to be used in reference to price rises and, yes, in this case we are referring to price rises.
  
  Inflation though is one contributor to price rises and is in fact a reference to 'inflating the money supply' and the last government's quantative easing was just that and it threatens the value of our money, other factors in rising prices include world commodity prices and seasonal factors.
  
  There is not much we can do about commodity prices and seasonal factors, that is why rising prices is tackled these days by addressing money supply using that very blunt instrument, interest rates.
  
  Increasing interest rates has a number of effects:
  . It can increase the value of £sterling and in so doing offset the rising cost of raw material imports
  . It encourages more saving and in so doing reduces the amount of money in circulation
  . It can 'cool' an overheating economy - something currently not a problem and that is why the BoE is split.
  
  Even Labour apologist economist David Blanchflower says that we know now how to 'control inflation' through interest rates.
  
  So should rates start to rise? Not much, a small blip upwards now would not harm the economy and might well start to put the brake on infl;ation. The old saying a 'stitch in time' is very relevant here, in that a small increase sooner will reduce the amount interest rates will need to increase later.
  
  Me, yes, I do believe that now is the time for a quarter pc on rates with perhaps 3/4pc in all needed over the next 11 months.
  
  The decision is one to be made by the Monetary Policy Committee of the Bank of England - but when will they grasp the nettle?

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