Surprise, suprise, inflation's on the rise

paul holdstock

let us hope that the economy never becomes as inflated as Browns' ego.
otherwise Mugabe will seem to be an economic genius.
labour governments have always ruined our economy, and been voted out, as a result, this one will be no different.
save for the fact that after 3 consecutive terms in office, and with the most dishonest, corrupt, sleazy, and demented leaders in their party history, labour will end up consigned to the history books.
the death of the labour party, partly due to it's own impending bankrupcy; may not prove to be entirely beneficial to the country.
as without a substantial second party, we will be in for a long period of one-party politics in the UK.

Martyn Rowe

Just to follow on from Paul Holdstock.

...... and then the Tories will come to power, spend most of their time putting out economic fires, whilst listening to the shameless tossers on the left blaming it all on anyone but themselves.

Simon Schama made a lovely comment during Obama's America about collective amnesia. History repeats itself, but people quickly forget the past.

The Tories will inherit similar problems (agitated unions, inflation, a stagnant economy) as they did in 1979. Unfortunately, memories are short. It won't be long before the public and the Labour opposition start conveniently blaming the terrible conditions on the incumbent government. David Cameron must prepare for a difficult slog. He only needs to look across the Atlantic to see how far Obama's star has fallen to know what's in store for him. Perhaps starting out with lower expectations will be a godsend.

Chris lancashire

I would just add that manufacturers and importers who source in Europe and in $ areas have sustained cost increases due to the £'s weakness and some price increases are still in the system.
This will stoke inflation, which will put more pressure on the £ which will generate further cost increases .....
A really vicious spiral downwards.
Of course, all this will only come to full fruition well after the election allowing the Great Gordo to claim "nothing to do with me guv".

London Calling

Boo Hoo…Now tell us something new ;0

The sound of Bankers scoffing over their profits and the Bank of England’s print press on overtime is enough to drive anyone mad …I think its called Hogs and Hyperinflation syndrome.

What a mess…

Alun Reynolds

You come across as a bit gleefull in this article Fraser. A pity, as the net result of all of this is going to be several years of abject misery for many people.

I'm sure you don't intend to, but it does come across that way.

2trueblue

The real rate of inflation is actually much higher, and we all know it.
The only thing that has kept people from noticing it is the fact that their mortgage rate is temporarily lower and retailers have til now been reducing prices to get us through the door.
From now on the gloves are off, to survive retailers will have to restock at much higher prices and the end of the fiancial year is not far off, so balancing the books will bring a new reality to companies. These will be passed on to us. The next set of inflation figures will be a real wake up call.
The media, especially the BCC, should stop doing Labours work and start reporting the facts so that the public are aware.

Tonyp17

All those so called experts who were forecasting deflation have plenty of explaining to do.
How different should the recent policies have been if the inflationary pressures had been properly recognised?
The next BoE quarterly Bulletin should make fascination reading.
My concern is that we will all suffer further because of this 'failure'.

Prodicus

Hands up those who think the economic and social car crash under whoever succeeded Brown would be pure accident and absolutely not of Brown's contriving.

toco

This is just the start of our suffering for a decade of appalling financial mismanagement by the increasingly erratic and delusional Brown.What a terrible blight he has been-it beggars belief that he is still gaining financially from us taxpayers when he should be paying us for his gross incompetences.

Rhoda Klapp

It must be going on two years ago Rhoda commented here about the unliklihood of deflation, and that inflation was the plan, not the unexpected result, of QE. Rhoda makes no claim to be an expert, save in obviousology. It is still the plan. And this bit of inflation is not due to printing money, but to other reasons such as devaluation. The inflation from QE is to come.

Fergus Pickering

Oh come on, A|lu Reynolds, we're not in church. Whether Fraser is gleeful or not makes not a jot of difference. A lot of people will still have a hard time. It's nice to know someone's happy. Not bloody Brown of course.

Giles Wilkes

The only part of this post that is any good is the last sentence. Go directly to Michael Saunders' piece to avoid this melodramatic claptrap, and understand the effect of base effects, import prices, one-off taxation changes, and so on.

Real trouble making inflationary pressure comes from a wage price spiral. None of this is anything to do with QE, which can only drive inflation up if it also drives nominal output up first.

I really fear for when you lot are in power . . .

Chris

The dumping the currency (sorry "fine tuning") to get out of trouble plan hasn't worked, yet again. It's never worked. It's always been a disaster. Why are we constantly told it's brilliant and we must hang onto the useless basked case that is the pound?

Greg

I agree with the arguments and thrust of Michael Saunders research note; BUT his conclusions which he acknowledges, diverge significantly from the consensus.

In some ways this note could be compared to a rouge opinion poll. It's possible CPI could be close to 4% YoY but not necessarily the most likely outcome.

It will be interesting to see if Citi's currency unit bases their GBP trading strategy on these numbers. I suspect not.

JohnAnt

Given that many April pay settlements are awarded on the basis of the previous December RPI figures, it's difficult to avoid the impression that this has been deliberately timed by Brown to engineer artificially lower pay settlements for all but his own public service minions, who will of course receive 'special case' treatment just before the GE, thanks to the spontaneous and benificent bounty of the Hander-Out-In-Chief. If we didn't know how hapless Brown is at spotting obvious own goals (such as the abolition of the 20% causing anger among the poor - something he thought he could simply ignore until it became obvious he couldn't) I'd suggest he was trying to cause maximum social unrest for the next government.

THX1138

Another prediction Fraser? Are you sure that's such a good idea? Now where was the GBP supposed to against the USD by now? And what about that pesky FTSE?

Victor Southern

I am sure the Prime Minister would say that he cannot accept those figures about inflation and would point out that our inflation is the lowest in the G7.

Fergus Pickering

Though I read Lipsey's tome, well most of it, twenty years ago, I'm no economist. You, Giles Wilkes, obviously are. Explain to me in simple language, if you would be so good, why printing money is not inflationary. I thought it was - by definition as it were. I thought it would only be non-inflationary if you did it by stealth, so that nobody knew. Whyn supply of something rises then the price falls, doesn't it? Or is money different from other things? And it's no good relapsing into jargon like a bloody scientist. If you know your onions you ought to be able to explain in language we can ALL understand. Oh, and you can append a note about why we have rising inflation now. Or is that just a rumour. In exchange I will tell you anything you want to know about Art. If there is anything.

egh

We could, of course, stop paying taxes to foreign powers: the euSSR will carry on bleeding us dry whatever our currency or its value.

Then el papa's showing up on our shores - which doesn't bode well for what he'd doubtless claim as further rights to tax us. The Reformation was very much about that, of cours.

Marcher Baron

It's no surprise to me - I've been predicting it while all those so-called "experts" were wittering on about deflation. You can't trash the currency when you import so much and at the same time print money without fuelling inflation (which was always higher than Labour's measures of it even before the bust). It's already devalued my savings. How long before we get to the stage where we need wheelbarrows to buy a loaf of bread?

TrevorsDen

just because inflation is at whatever % it is does not mean that Local govt pay rises will be the same. There is no automatic link.

Brown can pay of course what he likes - the question is can we afford it. The other question is what were the assumptions of the PBR?

The harsh fact is inflation is on the up and Britain is going to be left uncompetitive as a result. Wishful thinkong from labour supporters will not change that.

kevinc

My pay rise for 2007 - zero. My pay rise for 2008 - zero. My pay rise for 2009 - zero. Just received an email from our CEO: difficult market conditions, blah blah blah, consequently my pay rise for coming year - you guessed it - zero. In real terms now earning 20% less than I was in 2006 - welcome to the brave new world of middle-class destitution.

ami haji

Hi, I am Ami!
please how are you! hope you are fine and in perfect
condition of health.I went through your profile and i
read it and took intersest in it,please if you don't
mind i will like you to write me on this
ID(amihaji33@ yahoo.co.uk)
hope to hear from you soon,and I will be waiting for
your mail because i have something VERY important to
tell you.
Lots of love Mis Ami Haji!