Record rise in CBI retail prices gauge signals spiralling inflation

By Andy Bruce LONDON (Reuters) - Another sign that British inflation may surge more than expected can be found in the Confederation of British Industry's latest report. The trade group noted a record increase in its gauge of retailer selling-price expectations. The group's quarterly balance of retailers expecting to raise prices in the next three months versus those that don't - - a data set stretching back to 1983 - increased by a record 51 points during the first quarter to hit 65 points - its highest level since the second quarter of 2011. It is here - http://reut.rs/2ltW9NN - quite dramatically. The surge adds to signs that economists - who underclubbed forecasts for previous inflation spikes in 2008 and 2011 - may be too conservative about how much prices will be boosted by the pound's fall following June's Brexit vote. Other gauges of British inflation pressure have also increased by record amounts recently. The European Commission's gauge of selling-price expectations in its monthly retail survey - which dates back to 1988 - showed a record increase in December. And the closely-watched Markit/CIPS Manufacturing Purchasing Managers' Index pointed to a record increase in prices paid by factories for raw materials and energy last month. [GB/PMIM] The consensus of economists polled by Reuters shows consumer price inflation will peak at 2.9 percent before the end of the year. At the top end of forecasts, Citi and Britain's National Institute of Economic and Social Research both see inflation hitting around 3.7 percent before the year is out. So what does it mean? As this chart - http://reut.rs/2ltW9NN - shows, over the last 60 years high inflation has been very bad news for household spending, probably the key driver of Britain's economy over the last few years. (Editing by Jeremy Gaunt)