Inflation

Home The annual rate of inflation turned negative in April, for the first time since 1960, with deflation of 0.1 per cent as measured by the Consumer Prices Index, so that a basket of goods and services that cost £100 in April 2014 would have cost £99.90 in April 2015. But, measured by the Retail Prices Index, inflation continued at a rate of 0.9 per cent. Marks & Spencer reported its first rise in annual profits for four years. Police trying to find the gang that broke into safe-deposit boxes in Hatton Garden last month arrested nine men. A botanist claimed unconvincingly that Shakespeare was depicted in the frontispiece of

Home Launching the Conservative party manifesto, David Cameron, the party leader, told voters he wanted to ‘turn the good news in our economy into a good life for you and your family’. The Tories promised: to eliminate the deficit by the end of the parliament; to provide 30 hours of free child care a week for working parents of three- and four-year-olds; to grant a right for housing association tenants to buy their properties; to increase the inheritance tax threshold for married couples from £650,000 to £1 million (paid for by nobbling tax allowances on pension contributions for those earning £150,000); to raise the threshold of the 40p rate to £50,000 by

So much for Ed Miliband’s ‘cost of living crisis’. UK inflation, as measured by the CPI index, has just fallen to zero (pdf). Even this figure masks better news: food prices are actually falling, by 3.4 per cent over the last 12 months. The cost of motor fuel is down by 17 per cent, mainly thanks to collapsing oil prices. Crucially the price of such essentials should keep falling – as the below forecast from Citi (pdf) shows:- Now, should we worry about ‘deflation’? There are some economists who say this is a real problem because if things get cheaper than punters put off purchases. There is zero evidence of this happening in the UK. Indeed, according to Citi (pdf) …the opposite

The Office for National Statistics has updated its basket of goods that it uses to measure inflation, and has added some amusingly middle class items in, including sweet potatoes, liver and melons. Even better is the addition of ‘speciality beer/ale, bottled’ because of the ‘increase in expenditure and shelf space’ devoted to craft beer, and protein powder, a new item that ‘represents a distinct and growing sector not previously covered within the class’. Does this mean that Britain is becoming a nation of hipster gym bores who alternately boast about their interesting choice in bottled beer that has a kooky label (but that might still be a processed product rather than

Inflation fell to 0.3 per cent in January, the lowest level since records began in 1989. As the above chart shows, the government’s target of two per cent CPI inflation is now a long way off. The ONS has attributed the slow down to falling fuel and food prices — the latter is thanks to the on-going supermarket price wars. As Citibank’s Michael Saunders explains in his invaluable economics briefing (pdf), the weakness is concentrated in food, fuel and energy. Excluding energy, tobacco and alcohol, the year-on-year inflation level was 1.4 per cent, up from 1.3 per cent a year ago: Although inflation year-on-year has already sunk to a record low,

Deflation terrifies economists because once it starts, they have no idea what to do about it. When demand in an economy shrinks, companies cut jobs, and with fewer employed demand shrinks even more. The deflationary spiral is self-reinforcing. Central banks can cut interest rates to near zero and slosh money around like drunken lottery winners, but once hope flickers and dies, there is nothing they can do to persuade anyone to invest in the economy. Deflation took hold in Japan in the early 1990s and despite the government straining every sinew, its economy is still ailing 20 years on. Europe is right, then, to be in a panic. Inflation across

Home Checks began at British airports for passengers who might have come from west Africa with Ebola fever (even though there are no direct flights from the countries most affected). People who rang 111 with suspicious symptoms were to be asked whether they’d come from a high-risk country. Police arrested three men and three women from Portsmouth, Farnborough and Greenwich as part of an anti-terrorism operation. Of five men arrested the week before, two were released. The trial began before a jury at the Old Bailey of Erol Incedal on charges of preparing for acts of terrorism; parts of it will be held in secret. Ofsted said that ‘very little

Home Checks began at British airports for passengers who might have come from west Africa with Ebola fever (even though there are no direct flights from the countries most affected). People who rang 111 with suspicious symptoms were to be asked whether they’d come from a high-risk country. Police arrested three men and three women from Portsmouth, Farnborough and Greenwich as part of an anti-terrorism operation. Of five men arrested the week before, two were released. The trial began before a jury at the Old Bailey of Erol Incedal on charges of preparing for acts of terrorism; parts of it will be held in secret. Ofsted said that ‘very little

Tough at the top The clocks on Big Ben were cleaned by abseiling window-cleaners. Some other big cleaning/painting jobs: — Repainting the Forth Railway Bridge used to be a metaphor for never-ending work, but a new coating completed in 2012 is estimated to have a life of 25 years. — Sydney Harbour Bridge was, for the first 80 years of its life, cleaned by hand, but last year it was done for the first time by robot. — The world’s tallest building, the Burj Khalifa in Dubai, is cleaned by a team of abseilers, with all 24,000 windows taking three months to get through. — Most New York skyscrapers are

For the first time in 32 years, the overall pass rate for A-levels has dropped, and the percentage of those achieving an A* or A grade has also dipped slightly. One part of the country that has bucked the national trend is Newham. And in particular, the borough’s London Academy of Excellence – a brand new sixth form free school. Just under two years ago, this sixth form opened its doors to students in one of the most deprived boroughs in the country for the first time. Set up by a coalition of eight leading independent schools – including Eton, Highgate and Brighton College amongst their number – its goal was a straightforward

Home In a ministerial reshuffle, William Hague, who promised to leave Parliament at the election, was made Leader of the House, being replaced as Foreign Secretary by Philip Hammond, who was replaced as Defence Secretary by Michael Fallon. Sir George Young Bt, aged 73, was sacked as Chief Whip. Michael Gove was demoted to Chief Whip. David Cameron, the Prime Minister, said: ‘I wanted one of my big hitters, one of my real stars, one of my great brains, someone who has done extraordinary things for education in this country, to do that job.’ Mr Gove was replaced as Education Secretary by Nicky Morgan, who will keep her portfolio as minister

Wages in the private sector are now rising faster than inflation. The latest CPI inflation figures show that it now down to 1.6 per cent, comfortably below the Bank of England’s 2 per cent target. This is the sixth time in a row where inflation has fallen. An interest rate rise this side of the election is becoming ever more unlikely. Tomorrow, the Office for National Statistics provides it figures for average wage growth in the last three month. This is expected to show that wages are now increasing faster than prices, easing the cost of living squeeze. Labour argues that the cost of living crisis is about far more