Inflation

How many times have you heard in recent months that the era of low inflation is at an end?  The case for that assertion is beginning to look somewhat shaky. This morning brings news that the rate of inflation last month – at least as measured by the Consumer Prices Index (CPI) – fell slightly in December from 3.1 per cent to 3.0 per cent. While that is hardly a dramatic move it shows that, once again, the surge in inflation predicted by some has failed to materialise. Now that the inflationary effect of a fall in the pound in the second half of 2016 has dropped out of the

The craze for cryptocurrency can be explained by a host of factors: the allure of getting rich quick; the attraction of off-the-grid accountancy for malefactors like tax evaders and drug dealers (though Bitcoin is traceable); the glamour of the new. Despite blockchain currencies’ wild volatility thus far, I’d still posit that the more underlying attraction is to a reliable store of value. Bitcoin investors may not recognise their motivation as such, but the impulse behind computer-generated currency is revolutionary: to take the production and control of money away from government. Now that we live in a world of 100 per cent fiat currencies — backed by nothing — governments can

Home Theresa May, the Prime Minister, and David Davis, the Brexit Secretary, went to Brussels and had dinner with Jean-Claude Juncker, the president of the European Commission and the EU’s chief negotiator Michel Barnier. They came up with a joint statement that ‘efforts should accelerate over the months to come’. But by this week’s meeting of the European Council, Britain was deemed not to have done enough about the price it would pay to allow the EU to discuss trade matters. No great hope was held out that it would be any better by the next meeting in December. Keir Starmer, Labour’s Brexit spokesman, said: ‘There is no way we would

Oh dear. About this time last year, as part of its series of predications about how the sky would fall in after the Brexit vote, the NIESR predicted that inflation would hit 4 per cent. This was way out of line with the the consensus, higher than other economist was forecasting. But in the rather febrile atmosphere its nonsense forecast was given plenty of coverage – including a page lead in (yes, you guessed it) the Financial Times. It turns out that inflation has peaked at 3 per cent, and is widely expected to fall. Since the NIESR has been congratulating itself recently on the accuracy of its forecasts, it’s

This weekend the papers mooted that Theresa May’s government is looking to cut the English and Welsh student loan interest rate – now at a 6.1% headline rate for those who began uni in or after 2012 – in order to appeal to the youth vote. I find this frustrating. Not because I object; I’ve always believed on principle student loan interest shouldn’t be higher than inflation – charging students for their education is one thing, charging them for the financing of their education is a step too far. Yet if the Exchequer has limited resources to finally shell out something to relieve student loan pressures, cutting the interest rate is

The core consumer price index of inflation held unexpectedly steady at 2.6 per cent in July, further removing any possibility of an interest-rate rise this year. So what’s the downside? My eye is drawn to a bulletin from Nationwide, the UK’s most sensible mortgage lender. It reports a fall in quarterly profits after a rise in bad debts to £36 million from £16 million for the same period last year — small numbers but a significant trend — and its chief executive Joe Garner warns the sector to ‘balance its lending carefully’ as cheap-rate consumer credit continues to balloon while growth prospects decline. I’d say he’s right on the money.

Although Mark Carney has earned a reputation for doom-mongering over Brexit, today’s Bank of England press conference wasn’t all doom and gloom. While the bank voted – at six votes to two – to keep interest rates at 0.25pc (see the leader in this week’s issue of The Spectator for why this isn’t such a great idea), its Inflation Report did bear better-than-expected news. On inflation, Carney said it was expected to peak at 3pc in October from its current rate of 2.6pc. However, this rise is ‘entirely’ temporary, and the Bank of England’s Monetary Policy Committee (which aims to keep inflation at 2pc) expects real wage growth to return soon as earnings growth

There’s more doom and gloom for households today as new figures reveal the first decline in real earnings since September 2014. According to the Office for National Statistics (ONS), earnings growth slowed in the three months to March, at 2.1 per cent, compared to previous data which showed wages, excluding bonuses, grew at 2.2 per cent. This compares to inflation which jumped to 2.7 per cent in April. Meanwhile, the unemployment rate dropped to 4.6 per cent in the three months to March, and is now at its lowest rate since 1975. It was previously 4.7 per cent. It means that 1.54 million people are currently unemployed. While some analysts say that the

There’s bad news for households this morning following the news that inflation has soared to its highest level since September 2013. According to the Office for National Statistics (ONS), inflation is now at 2.7 per cent, up from 2.3 per cent in March. This is some way above the Bank of England’s stated 2 per cent goal. A number of factors contributed to the rise, but the main driver was higher air fares. This was largely because the timing of Easter pushed up the price of flights. In addition, tax changes in the Budget added to inflation as did rising costs of energy and clothing. Meanwhile, the retail price index (RPI)

The economists were right. For months now, they have been warning that the Brexit vote and the subsequent fall in the pound would drive up prices. Today’s figures from the Office for National Statistics confirm that consumer prices are rising at their fastest rate for more than three years. According to the ONS, the Consumer Prices Index (CPI) jumped to 2.3 per cent in February, up from 1.8 per cent in January and above the Bank of England’s 2 per cent target. Food prices recorded their first annual increase for more than two-and-a-half years, reaching 0.3 per cent higher in February than a year earlier. With the prospect of an interest rate rise now

From supermarkets to superyacht builders, sales figures are remarkably buoyant: consumer debt may be rising too, but no one can say the New Year economic mood is markedly downbeat. This column feels obliged to find something on the horizon to worry about, however, and my telescope is focused on inflation. If deflation was a real threat to developed economies in recent years, the pendulum is now swinging the other way. UK inflation is expected to hit 3 per cent by late 2017, what with higher import costs generally thanks to the weak pound, fuel-price rises as a result of Opec’s effort to restrict oil production, the pass-through to consumers of

The currency has been devalued by more than 30 per cent. Interest rates have been pushed all the way up to 20 per cent. The IMF is standing by with an emergency package, and capital controls and dollar rationing have been maintained. It has been a heck of a morning for the pound – although, fortunately enough for most us, the Egyptian rather than British one. Over here, it has all been rather quieter. The Bank of England, as most people expected, has stuck with its decision over the summer to take rates all the way down to the 0.25 per cent. It now looks inevitable that it will hold