When the Bank of England's Monetary Policy Committee meets this week, attention will be focused on whether it will announce another round of quantitative easing.

The UK central bank should forget about printing more money through the purchase of securities. That is the last thing the economy needs. Instead, it should concentrate on the real problem: an inflation rate that is fast getting out of control.

The bank is mandated to reach a target of 2 per cent. It isn't anywhere close to that. Inflation has exceeded the government's 3 per cent limit for the past seven months.

The situation is only going to get worse. There is no persuasive evidence that quantitative easing, also known as QE, has done anything other than boost asset prices. And the emergency that prompted the need to ease is over: The economy is in good enough shape, thanks to the depreciation of the pound and low borrowing costs, to make restraining prices a top priority once again.

The UK should avoid revisiting its inflationary nightmare of the 1970s. It has to do something to reverse the trend soon or it will be too late. During the financial crisis, the inflation rate reached 5.2 per cent as central banks flooded the market with cash. The conditions no longer warrant such action even if the government's budget squeeze lowers demand somewhat.

For all the talk among central bank officials and academics about the threat of deflation, that isn't what concerns ordinary people. They are worrying about how prices are going up. They certainly haven't noticed much sign of them coming down.

Missed targets

The official figures — even though they are far from perfect — make clear what is happening to the British economy.

The Office for National Statistics reported last month that consumer prices rose at an annual 3.1 per cent rate in September. No one expects that goal to be reached every month. But breaching the government's limit for seven straight months suggests that something is seriously wrong.

Dig a little deeper into the figures and the picture is even more alarming. Retail prices, a measure used by wage negotiators, surged 4.6 per cent in September. Some categories of goods gained even more. Prices of clothing and footwear, for example, jumped 6.4 per cent. A packet of butter that cost a pound (Dh5.89) a year ago now costs £1.22, according to the official figures. An orange now costs 36 pence compared with 27 pence a year ago. A cauliflower costs 91 pence compared with 79 pence. These are big price increases, the sort that people notice when they go shopping every week.

Some members of the Monetary Policy Committee don't seem to think that matters much. The overshoot "is not genuinely high inflation — ask your parents what inflation was like in the 1970s and 1980s," policy maker Adam Posen told students in Belfast, Northern Ireland, last week.

True enough. British inflation reached 25 per cent in 1975, and averaged an annual rate of 13 per cent during that decade, according to the Bank of England. It's not as bad as that now.

Even so, Posen's argument is ridiculous. Just because a patient has survived cancer doesn't mean his doctor shouldn't treat a chest infection. Likewise, just because we haven't tipped into hyperinflation yet doesn't mean there is nothing to worry about. Andrew Sentance seems to be the only MPC member who sees prices as a threat to the economy.

The Bank of England should clamp down on inflation right now. Here's why:

One, inflation is only going to get worse. There are increases in the value-added tax scheduled for the start of next year. That will feed through into prices. Add in the impact of a weak pound, and a strengthening euro, and price increases are going to keep escalating. If the deepest recession in living memory didn't stop retailers and manufacturers from jacking up prices, they aren't going to stop now.

Two, we'll never know for sure what would have happened to the UK economy without quantitative easing, but all it seems to have done is push asset prices higher. Equities and bonds have soared, and even property is resilient. All of that will feed into inflation as well.

Three, the economy is growing perfectly well. The latest figures surprised everyone: GDP increased 0.8 per cent in the third quarter, and 1.2 per cent in the three months before that.

The UK is doing better than could reasonably be expected after a financial crash. The emergency is over and it is safe to start worrying about prices again.