UK inflation lags behind US and Spain and is close to Germany’s

The countries experiencing some reasonable recovery in demand are all experiencing an upturn in inflation of a similar magnitude. Slow growth economies have also experienced a rise thanks to oil and commodity prices, but less so than the faster growing ones.

Spain leads the pack with 3% inflation, followed by the US with 2.7%. The UK at 2.3% is close to Germany at 2.2%.

This is not some Brexit related phenomenon!


  1. John Probert
    March 21, 2017

    This is nothing to worry about
    On Track

  2. Roy Grainger
    March 21, 2017

    The CPI inflation rate should be source of celebration, after many years of woeful failure the BoE are finally getting closer to their target 2% and won’t have to write a letter explaining their failure to the Chancellor.

    1. APL
      March 22, 2017

      Roy Grainger: “The CPI inflation rate should be source of celebration, ”

      The UK governments policy on inflation – a target of 2% per annum. Is calculated to bankrupt an individual over his life time, but in such a way that he/she won’t notice.

      At 2% the government will destroy £2 out of every £100 each and every year. That is declared government policy, to make British citizens poorer.

  3. ChrisS
    March 21, 2017

    Is therer any estimate of how much of the post-referendum depreciation in the pound has still to work through into domestic prices ?

    That will largely dictate where our inflation rate settles for the next 12 months. I suspect it will be a little higher than that of Germany for at least 12 months.

    However, all bets will be off if Marine LePen wins in France.

  4. Lifelogic
    March 21, 2017

    It could of course be even lower if we abandoned the renewable energy religion and when we finally get rid of all the EU Common Customs Tariff on imports. Alas now nine months later than it should have been due to pathetic dithering.

    Cutting taxes, employment regulations, red tape and the endless government waste it is used for – HS2, Hinkley, Lagoons, government propaganda, endless PC drivel and the likes would help reduce it hugely too. It would further make Sterling stronger and thus reduce it yet again.

    Alas with the current lovers of big government in charge this seems a long way off.

  5. Bert Young
    March 21, 2017

    Tell that to the BBC !.

  6. Mitchel
    March 21, 2017

    No it’s not “some Brexit related phenomenom”-it,combined with the ongoing distress level of interest rates,is the government -in time-honoured fashion-inflating it’s debts away.

    1. Bob
      March 21, 2017

      “it’s not “some Brexit related phenomenom”- it, combined with the ongoing distress level of interest rates, is the government in time honoured fashion inflating it’s debts away”

      due to their inability to run a sensible balanced budget.

  7. Leslie Singleton
    March 21, 2017

    Dear John–Any idea that 2.3% is high, let alone worryingly high, has no chance of impinging on my brain till interest rates don’t just nominally go up a bit but pick themselves off from the real negative levels they have been at for so very long.

  8. acorn
    March 21, 2017

    In volatile times like the present, it is best to stick with the RPI metric, it gets closer to an actual household “cost of living” menu of prices.

    • The all items RPI annual rate is 3.2%, up from 2.6% last month.
    • RPIX, the all items RPI ex mortgage interest is 3.5%, up from 2.9% last month.
    • The all goods RPI annual rate is 3.8%, up from 2.8% last month.
    • The all services RPI annual rate is 2.6%, up from 2.3% last month.

    The all goods RPI jumped 1% on the month, as the recent currency affects start to show.

  9. alan jutson
    March 21, 2017

    Off Topic

    I see from Guido’s website that the latest news on HS2, is that 17 PR advertising agencies are now engaged (taxpayer funded) in spinning the benefits of this wonderful project to all and sundry.

    For goodness sake, when will someone in Government get a grip and cancel this massively expensive fiasco.

    1. Martin
      March 22, 2017

      You now realise why I am cynical about the government’s Brexit plans. This railway was proposed when Mr Brown was prime minister. The best part of a decade later and the track has not reached Watford! This shows that it is the Nimby “planning” system that is holding things back and needs abolishing.

      Maybe HST2’s rising costs are pushing inflation up!

      P.S. Mr Redwood (or whoever) can you at least get British images for the VERIFY test as I cannot understand Russian and I am not sure what an American Street number looks like!

      1. Mitchel
        March 22, 2017

        Haven’t you heard?The Russians are coming;time to brush up on your cyrillic alphabet!”

        1. APL
          March 23, 2017

          Putin has obviously hacked the Captcha system.

          Probably did it in between hacking the DNC and stealing the BREXIT vote.

  10. Caterpillar
    March 21, 2017

    So does the UK have spare capacity or not? Mr Haldane obviously thinks it was OK to keep zombie companies in existence through low interest rates, but should these rates continue?

  11. Jack
    March 21, 2017

    Seems to largely be cost-push inflation. Oil prices were going up (until very recently), along with higher U.S. interest rates (which cause higher inflation) and a few other factors.

    Best way to keep inflation low is to keep BoE Bank rate at 0% forever and also abolish corporation tax and VAT, which all act to unnecessarily keep prices much higher than they would be otherwise.

    1. Jack
      March 21, 2017

      A good combination of corporation, VAT, and payroll tax cuts would be amazing for the economy. Both anti-inflationary but pro-GDP growth and full employment.

      Hopefully if done right it should get the budget deficit up by a decent amount which would replenish everyone’s savings and enable them to increase spending and reduce the ratio of private bank-created money to government-created money. The one thing the non-government sector (household sector etc) needs is higher incomes and not more private debt!

  12. Owen Francis
    March 21, 2017

    Sorry to go off=topic, but please could you comment on today’s hot issue, EU taking UK to Hague Court. You have previously said that Uk under no obligation as per Lords report.

    Reading about Hague it seems that jurisdiction only applies if both parties consent to judgement. But would UK refusing to give consent be very bad publicity for us.

  13. Andy Marlot
    March 21, 2017

    Is that inflation as measured 25 years ago or just some heavily massaged figure designed to fool us all into believing we’re not being made poorer every year?

  14. Invisible BBC inflat
    March 21, 2017

    Once the thought tunnel pointing towards Brexit is constructed by the BBC and other media, they have no need to continually inform the viewer that all negative phenomena met are directly stemming from Brexit. Yet they can deny any criticism that they said so or inferred it because “thought tunnels” are mental constructs and not visible to the naked eye, like BBC honesty.
    So increased inflation is the viewers “own” idea which the BBC does not own

  15. Antisthenes
    March 22, 2017

    Despite common consensus deflation is far more preferable than inflation. The Inflation myth is kept alive because it suits debtors. Certainly not consumers. Nobody appears to care for them despite they make up 100% of the population. Instead the emphasis is on protecting producers who should protect themselves by providing goods and services at the best quality and price.

    Historically inflation is very low and it is only now that it is even rising to the levels that government have arbitrarily decided is the optimum level. The sensationalism emanating from the likes of the BBC arising from that fact points to how infantile and partisan our society has become. Of course it is necessary to guard against inflation once again running out of control. However to do so we must base our actions to prevent it on empirical evidence not on speculation and conjecture. An all too frequent event particularly attributable to left wing progressives and anti-Brexiteers.

  16. MikeP
    March 22, 2017

    There is a fixation among economic commentators – be they journalists, politicians (not you John) or other “experts” – to compare ourselves only to ourselves. So we hear comparisons of our performance against the previous month, quarter or year. While successful businesses also do this they are much more aware of their performance against market leaders in their industry, or how else can they compete and aim to be at least as good as “the best”. Being better than ourselves last year is never going to help us as a globally trading nation.
    It’s high time that these “experts”, but mainly the media, starting showing the sort of comparison that you have given here. We should want to know how we are doing against Germany, Japan, USA, China, India and the EU27 and that knowledge should be the primary driver of the UK’s industrial and economic strategy.

  17. Lindsay McDougall
    March 23, 2017

    But UK inflation is rising rapidly and is likely to exceed 5% by the end of 2018. I’m still willing to wage a tenner at evens with you on that outcome but you haven’t responded.

    You are right; it isn’t a Brexit phenomenon. It’s down to a reckless BoE monetary policy and we urgently need to sack Carney.

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