Inflation

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

Amid the cacophony of moaning and groaning accompanying this week’s nationwide return to work was an eye-catching headline from satirical site The Daily Mash: ‘So we meet again, Southern tells commuters’. As someone who used to brave the Northern line on a daily basis, I can imagine the impending sense of doom felt by thousands of Southern customers as January 3 edged ever closer. Months of disruption thanks to staff shortages, industrial action and, if social media is to be believed, complete ineptitude on the part of the train operator, is enough to give anyone a New Year hangover. And now, what fresh hell is this? More strikes on the horizon,

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

So, inflation has gone up. Unexpectedly, it rose to a 22-month high of 1 per cent this week, with the full force of a weak pound and other rising prices fuelling the leap. This means more bad news for savers who are already concerned about the eroding power of inflation on their cash. The rise caused a bit of a shock, as many economists had predicted a much smaller increase to 0.8 per cent, up from 0.6 per cent the month before. Now adjusted analysis shows we could see inflation exceeding the 2 per cent target as soon as next year. What does this all mean for savers? Well, there is currently

It takes quite a determined Cassandra to see the rise in Consumer Prices Index (CPI) from 0.6 per cent in August to one per cent in September as some kind of crisis, not that that will stop the holdouts of the Remain campaign from trying to do so. When CPI fell below one per cent at the end of 2014, you might remember, there were dark warnings about the threat of deflation – with the horrors that would imply for borrowers, who would see the real value of their debts increase. Now, some are trying to present a rise to one per cent as bad news, with former Monetary Policy

When I wrote my last Daily Telegraph column critical of Btecs, an exam now taken by about a quarter of English university entrants, a friend of mine in the world of university admissions told me to wait for the reaction of Pearson Plc, which owns Btec. While A-levels and GCSEs are rigorously examined and discussed, Pearson get away with releasing very little data about Btec and plough a lot of money into marketing their exam. And they don’t very much like it being criticised. Rod Bristow, the president of Pearson UK, has written to today’s Daily Telegraph suggesting that I was wrong to suggest that Btecs have gone through serious inflation – and, ergo,

Annual CPI inflation rose by more than forecasters expected to reach 0.5 per cent in March, up from 0.3 per cent in February, figures released today show. The rise was due to a jump in the cost of air fares, which were affected by the timing of Easter. Growth in fuel prices slowed and consumers benefitted supermarket price wars that saw the cost of food fall by 0.6 per cent between February and March. Core inflation, which strips out energy, alcohol, tobacco and food, rose to 1.5 per cent from 1.3 per cent – further evidence the UK’s period of low inflation may, slowly, be coming to an end.

The unemployment rate fell to 5.1 per cent in the three months to November, putting it at the lowest level since 2006 – and back to its average over the six years before the crisis. Back to what the Bank of England regards as the “equilibrium” rate. [datawrapper chart=”http://static.spectator.co.uk/DUFV6/index.html”] The other side of the coin is that pay growth is down too. Excluding bonuses it’s fallen to a sluggish 1.9 per cent year-on-year, around half its pre-crisis rate. Workers’ spending power is still growing – but that’s driven by low inflation. [datawrapper chart=”http://static.spectator.co.uk/u0fNr/index.html”] At the equilibrium unemployment rate, the Bank of England thinks a further fall in joblessness could drive up inflation

When David Cameron said this week that he is worried his children would not be able to afford to buy their own homes, he struck on one of the greatest economic problems of his premiership. The old British promise is that if you work hard and make the right decisions, you can advance in life and own your own home. This is the ladder that most aspire to climb. But for an entire generation, even the hope of home ownership is slipping out of view. A huge number of young Britons cannot hope to have the kind of life their parents enjoyed. The Prime Minister must know he is on dangerous

Britain stayed in deflation in October, with the Consumer Prices Index falling by 0.1 per cent over the year. So far this year inflation has averaged just 0.02 per cent – the longest run of low inflation since the 1930s. Citi says inflation is likely to turn positive again next month as the effects of last’s years oil price nosedive falls out of the 12-month change – but with sluggish global growth, the cost of goods falling and inflation in the cost of services running at just 2.2 per cent, it looks like low inflation will be with us for a long time. [datawrapper chart=”http://static.spectator.co.uk/y0IrQ/index.html”]

Inflation slumped back to zero in the year to August, down from a rise of 0.1 per cent in July, figures from the Office for National Statistics show, making seven months of little or no inflation. The costs of food, energy and imported goods have been falling, pulling inflation away from the two percent target. [datawrapper chart=”http://static.spectator.co.uk/XXn28/index.html”] Even stripping out some more volatile components—energy, food and tobacco—‘core’ inflation fell to one per cent, easing pressure on the Bank of England to raise interest rates. Tomorrow’s jobs figures are expected to show strong private sector pay growth, but jobs growth seems to be picking up in higher-pay and higher-productivity sectors, decreasing inflationary pressures as more

Home Andrew Burnham described calls from Yvette Cooper, a rival candidate for the Labour leadership, for him to withdraw from the contest as ‘quite strange’. The problem was how to prevent Jeremy Corbyn, a left-winger, from being elected by the alternative vote system by 610,000 party members and registered supporters. Gordon Brown, the former disastrous Labour prime minister, contributed by making a 50-minute speech in a small room at the Royal Festival Hall, during which he paced up and down continuously for an estimated 1 mile 1 furlong 5 chains and did not mention Mr Corbyn’s name. Kezia Dugdale, a Member of the Scottish Parliament, was elected leader of the

Home The government postponed a Commons vote on relaxing the Hunting Act in England and Wales after the Scottish National Party said it would oppose the changes. Scottish police admitted that a crashed car off the M9, reported to them on a Sunday, was not examined until the Wednesday, when one of the two passengers inside it was still alive. She died three days later. A case of H7N7 bird flu was found at a poultry farm near Preston, Lancashire, where 170,000 chickens were slaughtered. British people were being urged by the Foreign Office to leave Tunisia because ‘a further terrorist attack is highly likely’. Up to 5,000 were flown

Home Talha Asmal, aged 17, from Dewsbury, West Yorkshire, died in a suicide bomb attack on forces near an oil refinery near Baiji in Iraq, having assumed the name Abu Yusuf al-Britani. A man from High Wycombe, Buckinghamshire, Thomas Evans, 25, who had changed his name to Abdul Hakim, was killed in Kenya while fighting for al-Shabab. Three sisters from Bradford were thought to have travelled to Syria with their nine children after going on a pilgrimage to Saudi Arabia. Britain had had to move intelligence agents, the Sunday Times reported, because Russia and China had deciphered documents made public by Edward Snowden, the CIA employee who has taken refuge in

Reports of deflation’s death are exaggerated – sure, the CPI index has risen from -0.1pc in April to +0.1pc in May. But many important things are still getting cheaper: food, for example, costs 1.7pc less than this time last year. And the prices of larger-ticket items, the so-called ‘consumer durables,’ fell an average 2.6pc in May – the sharpest year-on-year drop since Labour’s 2009 emergency VAT cut. But as the above graph shows, Citi reckons (pdf) that inflation will not bounce back to where it was before. Sluggish pay and a strong pound mean we’re in for a relatively long period of stable prices. Its chief economist, Michael Saunders, sums it up thusly:- ‘A fairly