Inflation

Well, the great breadmaking debate hots up. David Cameron neatly sidestepped the heffalump trap that Nick Ferrari put in his path in an interview on LBC when he asked him the price of a Value Loaf in Tesco or Sainsbury. As you and I know, dear reader, Mr Cameron would no more eat that stuff than his own fingernails, and I for one applaud his good sense. If you can afford not to, don’t. But his elegant solution to the problem of not knowing that loaf-shaped carbohydrate costs 47p (he thought bread costs ‘north of a pound’, which is true of the kind he eats, only double that) was to

Labour had better get used to headlines of economic upgrades. There’s about two dozen major forecasters out there, and each will take a turn to say that Britain’s doing better than they’d thought. To have such good news repeated will be a headache for Labour, as Iain Martin blogs today. But Labour are right to latch on to the caveat: the GDP number are not much use to someone facing a decade of wage stagnation. Words can be deceptive in economics: if you read ten news stories from ten forecasters talking about upgrades, it doesn’t necessarily mean things are getting better. The Treasury recently released five-year forecasts from the people

Mark Carney made his mark this morning. Moments ago, he opened his inflation report and issued his ‘forward guidance’, which is designed to make the markets aware of his long-term plans for interest rates. This is important because, although there are signs of life in the British economy (and Carney was cautious about them), inflation remains above the Bank of England’s target, the base interest rate remains rooted to the floor and unemployment remains high at around 8 per cent. There is also the question of Britain’s mounting debts, the answer to which will largely depend on how the bond markets react to this and other announcements. And then there is

Matt Hancock, the business and skills minister, addressed the Resolution Foundation’s low pay debate this morning, an indication of how seriously the Tories are taking the rising cost of living. He delivered a resounding defence of the minimum wage. He said that the evidence was overwhelming: the minimum wage did not harm employment levels: and declared that the Conservatives should ‘strengthen’ the minimum wage. He said that the minimum wage should be enforced, and hinted that the Low Pay Commission might be reinforced. He said that working more hours was not necessarily the right answer, contrary to those who hold that Britain needs to harder and longer. Beyond that, Hancock proposed

Today’s employment figures don’t contain much new to shout about. The number of people in work — although it rose by 100,000 on the previous quarter — is actually down very slightly from last month’s record high (but still above the pre-recession peak, just). Unemployment fell by 49,000 from Q2 to Q3, although that’s well within the Labour Force Survey’s margin of error (so we can’t be certain that it fell at all). The best news in today’s figures — from the government’s point of view — is probably that the headline unemployment rate is now 7.8 per cent, very slightly below the 7.9 per cent rate when the coalition

After falling to 2.2 per cent in September, inflation — as measured by the Consumer Prices Index — rose to 2.7 per cent in October. On the Retail Prices Index, inflation rose from 2.6 per cent to 3.2 per cent. The main cause of the rise is the government’s changes to university tuition fees, which put the maximum annual fee up to £9,000. Today’s figures are the first to include the effects of the policy — with the education index 19.7 per cent higher than last year. But food prices were up too — by 0.5 per cent on last month and 3.3 per cent on last year. The good

George Osborne might not be feeling particularly comfortable with today’s August Inflation Report from the Bank of England, as Sir Mervyn King is expected to slash the Bank’s growth forecast for the British economy in 2012 from the 0.8 per cent it predicted in May to close to zero. This morning’s announcement will also include some mildly good news for households, with the Bank due to predict a 2.1 per cent fall in inflation by the end of the year. This will bring inflation down below the two per cent target, which, as the CBI’s Richard Lambert pointed out on the Today programme, will mean ‘families starting to feel a

Last Thursday Mervyn King said ‘the case for further monetary easing is growing’, and today’s surprise inflation figures give the Governor and his policymakers more leeway to introduce the next round of QE, probably as early as next month. Consumer price inflation fell to 2.8 per cent in May from 3.0 per cent in April, below analysts’ average forecast of a flat reading. It’s the weakest monthly inflation since November 2009, with the main contributors being falling food and oil prices. This is good news indeed, especially given that inflation has been – and still is – eroding savers’ earnings by about 8 per cent over five years. Let’s not

Mervyn King unfurled a mast of metaphors this morning. ‘We are navigating through turbulent waters, with the risk of a storm heading our way from the continent,’ he said. ‘We don’t know when the storm clouds will move away.’ The eurozone, he said, is ‘tearing itself apart’.   So poetic was his language — a rare gift in a central banker — that it almost made one forget the painfully prosaic nature of his facts and figures. Inflation, already at target-busting levels, will be much stronger than the Bank initially envisaged, remaining above 2.5 per cent for the rest of the year. That’s almost a whole percentage point higher than