Remember those reports (including a post on this blog) yesterday about the U.K. slipping into deflation today. Well forget about it. Didn’t happen.

In fact, things surprisingly went the other way. Prices actually increased by 3.2% for February. Economists are scratching their heads trying to figure out what happened. Their best guess is that the sharply lower pound led to increased import prices which more than offset falling domestic prices. Anyone for a little stagflation.

I suspect that this won’t be the last surprise that the U.K. or for that matter the rest of us experience. This tightly coupled system we live in has more than a few curve balls to throw.

more: here