Inflation is falling

Yesterday’s announcement that inflation on the government’s preferred measure, CPIH,  has fallen to 2.7% was welcome confirmation that inflation is falling again.  The annual rate fell despite the boost to inflation from higher home energy costs, higher prices for petrol and diesel, Council tax rises and higher taxes on alcoholic drinks from the Autumn budget. Dearer electricity featured as an upwards pressure, which is the result of the big switch away from cheaper carbon based generation.

The feared big surge in inflation from weak sterling has not taken place as some predicted. Just as lower sterling in 2016 did not do much to boost shop prices, so it appears higher sterling against the dollar and yen is not doing much the other way either. Shop prices have remained under competitive pressures, with strong internet rivals keeping  many prices keen. That same internet also helps retailers source better value product from around the world to keep their prices down.  Core inflation is at 2.5%.

There is no need for the Bank to worry about the current inflation rate. It is true there is a bit more energy price inflation to come through with oil now trading at $70 a barrel for Brent crude. There may be further Council tax rises to come as Councils seek more money for a variety of spending programmes. There is no sign of a general wage/price spiral about to break out in the way that was common in the last century.

Once again the extreme forecasts of a big surge in inflation based on a weaker pound have not come true, just as industrial output and the general growth of the economy has surprised the Treasury and other forecasters on the upside. The government itself would like a bit more wage inflation, and has sought to get wages up at the lower levels with its Living Wage policy.

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66 Comments

  1. Duncan
    Posted January 17, 2018 at 5:55 am | Permalink

    ‘The government itself would like a bit more wage inflation, and has sought to get wages up at the lower levels with its Living Wage policy.’

    Try cutting income taxes for those non-state employees on incomes below £25k or does that divert taxpayers money away from the oh so important public sector?

    What we are seeing is a government driven not by principle but by a desire to quell the most severe threat to its position. Therefore this PM will throw money at the waste-fest that is the pampered, privileged public sector simply because this area of the economy is one which is organised and can cause significant political problems

    The private sector worker is left to count the cost through higher taxes to fund the privileges enjoyed by the public sector employee who enjoy absolute security of employment and a range of other employment benefits that the private sector worker can only dream of

    We have a Tory government abusing the fragile position of the private sector. A sector that doesn’t have the magic money tree to turn too whenever political problems arise.

    People need to realise that today’s politicians hate tax cuts because it reduces their spending options and that reduces their power to influence events. The now annual NHS begging bowl tosh is a classic example of how a government can throw our cash down the plughole of an area of state activity that as the potential to cause political damage.

    The Living Wage policy is New Labour tosh. Cut taxes to private sector workers. It is their money. It does not belong to Hammond for him to throw at whichever political problem comes along.

    Taxpayers money is being used by political parties to protect their own electoral prospects. Keynes has been a god send to every political government since 1945

  2. Ian Wragg
    Posted January 17, 2018 at 6:25 am | Permalink

    Meanwhile here in the real world the 2 largest bills increase by about 10%%. Council tax to rise significantly and changing supplier the cheapest fuel tarrif up 12%.
    We don’t buy flat screen TV every month.
    We do pay council tax and fuel bills.

    • Hope
      Posted January 17, 2018 at 9:16 am | Permalink

      We are stuck by economic cooperation sequences of regulatory alignment. Hands tied by May. Hammond stating days ago the U.K. Will follow EU economic model!

      May has AGREED regulatory alignment to the EU, this means staying in the customs union and single market by another means. Allowing a foreign power legal jurisdiction over citizens living in our country is outrageous- does this apply to all other nations as well? Giving away tens of billions of taxpayers money for nothing in return! carry on with freedom of movement by another name-why?

      As a side story, Penny Mardaunt’s ridiculous article in the paper shows how stupid she is or thinks we are to justify wasting our taxes by the billions. She claimed we are a superpower in giving away our money and should be proud! Did she read the NHS stats last week before writing her article where people could not get treated by the thousands? She needs to be sacked. She has no control over the £2 billions of overseas aid given to the EU to spend, none whatsoever! It makes all her claims utterly false. She is deliberately misleading the public and should be sacked.

      We now have a loneliness minister! Not Brexit minister. Good grief May is useless.

    • APL
      Posted January 17, 2018 at 12:19 pm | Permalink

      Ian Wragg: “Meanwhile here in the real world the 2 largest bills increase by about 10%%. Council tax to rise significantly and changing supplier the cheapest fuel tarrif up 12%”

      Yes, everything in the economy is a function of the price of fuel. The government artificially handicaps industry and commerce by it’s outrageous duty and VAT on fuel.

      If we really wanted an industrial renaissance, the government would abolish fuel duty.

  3. Grant
    Posted January 17, 2018 at 7:37 am | Permalink

    Surely it’s up to mr carney and the BoE to decide if interest rates should be held or raised..they are the people in office with all of the information to take the decisions when necessary

    • formula57
      Posted January 17, 2018 at 2:00 pm | Permalink

      Surely – and but for their track record of maladroit, mis-timed decisions, we could all repose absolute confidence in them so doing.

  4. agricola
    Posted January 17, 2018 at 8:31 am | Permalink

    It says more about economics, forecasts , and forecasters than it does about reality. I makes me think that forecasts are there to feed peoples political prejudices rather than to produce hard reliable data.

    • David Murfin
      Posted January 17, 2018 at 9:17 am | Permalink

      Hard reliable data is produced after the event.
      Forecasts are inherently uncertain, and depend on the forecasters’ outlooks.

  5. Lifelogic
    Posted January 17, 2018 at 8:32 am | Permalink

    Also a huge 20% increase in Insurance Premium Tax from our dire tax before breakfast, lunch and dinner Chancellor. For some this can increases inflation by 1% on its own! Also puts more pressure on our “envy on no one” NHS.

    And “if” we do finally get cleanly out of the EU we could also cut taxes, deregulate, go for cheap energy, easy hire and fire, cancel gender pay reporting, break free of Philip Hammond and the dire “European Economic Model”, cancel the attacks on the Uber and the gig economy and all the other damaging PC drivel from May and Hammond. They we would do far better still. We could even have the £1M IHT threshold (each) that we were promised many years ago by ratter Osborne.

    The country might even avoid Corbyn by the Tories showing some vision, economic competence, a sound economy and becoming popular.

    • Lifelogic
      Posted January 17, 2018 at 8:55 am | Permalink

      Doubtless the BBC will report this as:- Despite Brexit/Trump/Global Warming (delete as applicable) – inflation has fallen.

      This seems to be standard for reporting any issue on the BBC currently.

      Still no significant warming at all for about 19 years now, so when will the BBC report this? More drivel about electric cars & vans from Lord Debden chair of the Climate Change Committee today. Much cheaper to run an electric car he says, well despite the tax breaks and the tax payer subsidies it is not actually cheaper.

      Parliament has legislated to make it mandatory he says – well time to undo that absurd law very quickly. Oh and electric cars are not “zero emission” at all and drivers sitting about waiting for them to charge up is not a very efficient use of time. Fine as second city cars for wealthy virtue signallers but with current technology a waste of time for most people.

    • Lifelogic
      Posted January 17, 2018 at 9:11 am | Permalink

      As you say the dearer electricity is also caused by government. So most of this inflation is caused by yet more government taxation or government rigging the energy markets towards the “renewables” religion.

      The absurd complexity of tax in the UK and the employment laws also pushes prices up significantly (with extra legal, potential liability, admin and accounting costs resulting) as does the absurdly structured auto enrolment pensions and the minimum wage laws (which prevent many people from legally getting a job, or even ever learning how to do a job).

      • Leslie Singleton
        Posted January 17, 2018 at 5:28 pm | Permalink

        Dear Lifelogic–What I have not seen commented on, at least not in any depth, is the effect on businesses considering starting up or only marginally surviving of minimum and so-called living wage laws. How many more businesses would have started up or kept going if there were no such thing? How many more people would be in work??

    • Hope
      Posted January 17, 2018 at 9:23 am | Permalink

      We are not cleanly leaving the EU. Whether there is a deal or not May has agreed regulatory alignment to the whole of the U.K.! That is staying in the single market and customs union by another name. Legally the U.K. Has technically left, but this clause keeps the U.K. In the single market and customs union, it means the U.K. Has its hands tied for trade deals around the world and what it can do economically. It hands are tied. May unilaterally agreed this without a mandate from the public.

      The MP remaining traitors who will not accept the public vote have put pay to there being no deal as it needs to be voted on by parliament and the traitors will keep sending her back. That was the pointer the amendment by Grieve. Are expected to beleive this has nothing to do with the EU or MP visits to the opposition in negotiations!

      JR knows this, but it does not feature in this or any of his recent blogs. It is very significant.

      • Blue and Gold
        Posted January 17, 2018 at 5:50 pm | Permalink

        No doubt a Daily Mail reader!!

        • Hope
          Posted January 18, 2018 at 1:39 pm | Permalink

          You should not presume to make comments intended to insult me. Like your other comments based on ignorance and lack fact or evidence.

    • Chris
      Posted January 17, 2018 at 9:32 am | Permalink

      The Tories have the means to win people back. I think most of us commenting on this site could rustle up a list of policies that are true Conservative and real vote winners, and which would ensure a Labour defeat. However, we have been rejected by the left/liberal types running the Conservative Party. They will reap their “rewards” at the ballot box, and they will deserve it. However, it is the people and the whole country which will suffer because of their utter stupidity and lack of integrity and principles.

      • Lifelogic
        Posted January 17, 2018 at 7:06 pm | Permalink

        Indeed, but hopefully they will find a working compass soon.

    • Duncan
      Posted January 17, 2018 at 9:36 am | Permalink

      I have zero expectations from the party I have always voted for. This sorry excuse for a Tory party sold its soul to the liberal left devil when Cameron became its leader

      And now the party veers even further left to try and squeeze the Marxists

      Today, we have Boris Johnson calling for more spending on the bottomless pit that is the NHS. A state entity constructed around the needs of its employees while patients are hung out to dry.

      But, you cannot circumvent the laws of finance and at some point the UK Exchequer will hit a liquidity brick wall.

      Our freedoms are under attack by the ‘hate crime’ narrative with minority rights issues being used to impose social control mechanisms upon us with the BBC at the forefront aided and abetted by this government

      The Tories core vote is being taken for granted.

      • mickc
        Posted January 17, 2018 at 2:17 pm | Permalink

        I entirely agree. Vote Torygraph get Blairism. ….

      • Know-Dice
        Posted January 17, 2018 at 4:20 pm | Permalink

        Duncan,

        “The Tories core vote is being taken for granted.”

        The core vote WAS taken for granted at the last General Election by a rubbish manifesto and we all know what the end result was…

    • Lifelogic
      Posted January 17, 2018 at 10:37 am | Permalink

      Latte tax on it way too it seems. With the 20% vat on top (one assumes). So someone on the minimum wage works for an extra two hours earns £15.00 pays tax, NI (plus employer’s NI) then spends it on Lattes (with vat and latte tax) perhaps ends up giving about 70% of these earning straight back to the state. Ends up with perhaps just three coffees (rather less in London) for all their labours!

      Clearly we urgently need to tax breathing and farting too (farm animals and people), all those nasty greenhouse gases of CO2, methane, H2S ….. all sending us to a fiery hell – but I had better not give P Hammond any more ideas.

      Where is a British TTMA party – Taxed Too Much Already? High taxes kill productivity, incentives and an efficient economy dead. Why can so few Tory MP and ministers see this obvious fact?

      • Know-Dice
        Posted January 17, 2018 at 4:22 pm | Permalink

        LL,

        May be Nigel should team up with the “Tax Payer Alliance” as UKIP have clearly lost all sense of direction.

    • bigneil
      Posted January 17, 2018 at 11:48 am | Permalink

      With well over a 1000 people a day arriving with hands out for their “life on the UK taxpayer” taxes will NOT be cut ( apart from those who have offshore accounts). Cuts to all our services, cuts to the Forces, cuts to the Police etc . . .and a never ending river of people expecting/needing . .and getting . . . their whole lives financed by us.

      The govt keeps loading the new arrivals “UK lifeboat”. . . it WILL sink.

      • Lifelogic
        Posted January 17, 2018 at 4:11 pm | Permalink

        Higher and higher tax and virtually nothing in the way of “public services” of any real value at all to the public.

    • stred
      Posted January 17, 2018 at 12:05 pm | Permalink

      Thank goodness the vultures gave up, at least temporarily, on plans to increase probate fees from £215 to £20k for anyone with a big house. With the NHS the way it is Aussie flu and no jabs that work available, that could have been a big earner for no 11 this winter.

      • Lifelogic
        Posted January 17, 2018 at 4:15 pm | Permalink

        Indeed I had forgotten about that proposed racket on top of IHT at 40% above the tiny (ratted on) threshold.

        Why live in the UK if you are rich or hard working many must be asking?

    • Lifelogic
      Posted January 17, 2018 at 2:37 pm | Permalink

      Good performance from Theresa May today in PM questions at long last. She almost sounded like a real Tory for a change. Please just get her a working compass.

      Does Corbyn choose his shadow team to make himself looks relatively sane? What a rabble of compete dopes. Surely the voters won’t be conned into actually electing them will they?

  6. am
    Posted January 17, 2018 at 9:03 am | Permalink

    With inflation coming down over the rest of the year we should see an increase in real wages.
    real = nominal – prices applies to wages and gdp. So gdp should benefit too.

  7. Bert Young
    Posted January 17, 2018 at 9:05 am | Permalink

    No sign of the cost of living falling in my household . I’ve just completed my analysis of last years income and expenditure , it was up by 4% ( and there was no expensive holiday last summer !). My wife does the shopping and often reports increases in the essential items ; one week she goes to Tescos and the next to Sainsburys in nearby Didcot . Last year the lower overall cost of oil ( used for my central heating ) was lower ; last week my new delivery was up by 20% ( hopefully this increase will revert by the Spring ). Congratulations to John who made a very impressive response to the SNP woman in the HoC ; the Scots know which side their bread is buttered when they voted in their referendum to stay in the Union – they needed to be reminded of this .

  8. ChrisS
    Posted January 17, 2018 at 9:37 am | Permalink

    As others are suggesting, large elements of inflation are caused by Government, local and central, through changes to taxation which, of course, only ever go up.

    However, the story is not all bad : the Government has rightly held down public sector wages, reducing them back down to rough parity with the private sector when over-generous pensions are taken into account. all that is needed now is to remove national pay bargaining altogether so that Public Sector pay is more closely aligned with the private sector across the country.

    The last two Chancellors have also acted to put the squeeze on central government and councils to become more efficient.

    These measures have had a positive result but Council Tax is a classic case of the Government allowing Councils to put up taxes to compensate for less central government support in the hope that the electorate will not blame Whitehall for the increases.

    Council tax disproportionally hurts the elderly and smaller households indiscriminately, most particularly Conservative voters.

    What a pity the introduction of the Community Charge was so badly handled. That would have been the best solution to fund local services.

    We really should rethink local authority spending. I would favour a local income tax but without the ridiculously high personal allowance that allows so many people to make no contribution towards the services they use.

  9. Newmania
    Posted January 17, 2018 at 9:47 am | Permalink

    Well it has come down slightly form its 3.1% high to 3% due to faltering demand and this country slips further and further behind its competitors and fails to capitalize on the global boom the rest the world is enjoying.
    The currency is game of cat and mouse. The UK economy should have been superbly set to charge forward into the new global age but this upward pressure is always offset by Brexit which in real time , (so even John Redwood can see it ) depresses the currency as the worst result becomes more likely
    It needs hardly be said that livings standards are falling , the NYHS is collapsing but personally I really resent the slashes to education funding.

    Short changing our children to pay for Brexit – pretty despicable and just so depressing to think this was my country

    • libertarian
      Posted January 17, 2018 at 1:34 pm | Permalink

      Newmania

      We are still firmly in the EU, so everything you whinge about is a direct result of the EU I’m afraid. You can only compare once we’ve you know actually left

    • Richard1
      Posted January 17, 2018 at 5:54 pm | Permalink

      its probably true to say the economy is not growing as it could be & there may be an element of Brexit uncertainty in that. But I think the threat of a neo-marxist govt under corbyn has become the main threat – thats certainly what i hear from international investors and workers now. Also, you’d have to admit the hit has been much less than was forecast by project Fear?!

  10. Pragmatist
    Posted January 17, 2018 at 9:55 am | Permalink

    “It’s the Council Tax, stupid!”
    The Head of my Metropolitan Borough Council announced months ago “Next Year’s Council Tax will inevitably be increased to the maximum” It is the one promise the Labour Authority has kept every single year.
    Of course the Head is only there at “The Pleasure of the Government” and so is the increasing Council Tax. Plus precepts ( which means even more tax ).
    So , until the Tories ditch the Council Tax and cut the salary of the Head of the MBC by a good half, there will be little improvement if any.

  11. Anonymous
    Posted January 17, 2018 at 10:21 am | Permalink

    The bills that I can’t avoid are all going up.

    A nice holiday is no closer in sight.

  12. Denis Cooper
    Posted January 17, 2018 at 10:28 am | Permalink

    There is a chart of CPI going back to 2008 here:

    http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8194

    and having lingered around zero during most of 2015 it started to rise at the end of that year, which was nothing at all to do with the EU referendum held six months later. Since then CPI has followed an upwards trend with no more than a small upwards perturbation which can be attributed to the result of the referendum. If there had been no referendum, or if we had voted to stay in the EU, then maybe CPI would now be a fraction of a percent lower than it is, that is all.

    Anybody can see that this is the factual case, but some choose to lie about it. Just as some choose to go across to Brussels and undermine their country’s negotiating position by conniving with the EU’s chief negotiator. And just as some prefer to dig into what a Tory MP said on a blog years ago rather than go on the EU Commission website and see what they have to say now about the benefits of their precious EU Single Market:

    http://johnredwoodsdiary.com/2018/01/15/economic-assessments-of-leaving-the-eu/#comment-913138

    1.6% added to the collective GDP of the EU member states, 1.3% more jobs.

    • Denis Cooper
      Posted January 17, 2018 at 12:30 pm | Permalink

      Here are pictures of a clutch of ………….eurofanatic MPs encouraging the EU’s chief negotiator to take a hard position against their own country:

      https://www.mirror.co.uk/news/politics/remain-mps-deny-arguing-softer-11857874

      They should certainly not be in our Parliament, in either the elected chamber or the archaic unelected chamber, and at least some of them probably wouldn’t be in the elected chamber now if enough of their constituents understood what they are up to and had a fresh opportunity to kick them out.

      • Lifelogic
        Posted January 17, 2018 at 4:20 pm | Permalink

        Indeed and nearly all regular BBC remoaners. I had thought D Grieve to be rather better that that.

        • Denis Cooper
          Posted January 18, 2018 at 11:34 am | Permalink

          Dominic Grieve has form, going back at least to 2008 when he was the Shadow Attorney-General and he advised David Cameron that Tory MPs should not vote for an amendment laid by Bill Cash to affirm and protect the sovereignty of Parliament. Division No 120 here:

          https://publications.parliament.uk/pa/cm200708/cmhansrd/cm080305/debtext/80305-0024.htm

          “New Clause 9

          SUPREMACY OF PARLIAMENT

          ‘Notwithstanding any provision of the European Communities Act 1972, nothing in this Act shall affect or be construed by any court in the United Kingdom as affecting the supremacy of the United Kingdom Parliament.’.— [Mr. Cash.]”

          “The Committee having divided: Ayes 48, Noes 380.”

      • Stred
        Posted January 18, 2018 at 6:37 am | Permalink

        Pictures and comments were refused to Farage and the Leave business leaders last week. A sure sign of collaboration.

  13. Epikouros
    Posted January 17, 2018 at 10:57 am | Permalink

    Inflation is a curse for the public as it increases prices(when QE eventually works through to the High street we may well curse it even more). For government it is a blessing as it aids the reduction of its debt if only in value if not in actual amount. Inflation is pernicious far more attractive to the public is deflation but the government with the aid of its central bank will it seems prefer to undermine its citizens standard of living by working furiously to create inflation deeming about 2% as about enough that they can aim for so as to fool us into believing they are doing so is in our best interests.

  14. Blue and Gold
    Posted January 17, 2018 at 11:03 am | Permalink

    No, it is not ‘there may be ‘ Council Tax rises, it is an absolute certainty there will be a rise.

    Council Tax is extremely unfair. The better off one is the less you pay, effectively. Those with a Band D property are the hardest hit, whilst those on the top band do not pay much more.

    As usual the very wealthy are looked after.

    Another contributor mentioned Insurance Premium tax, another Tory stealth tax (from 1992, if I remember rightly, along with a raise in VAT, airport departure tax and Vat on utility bills). The Insurance tax is now used as a ‘cash cow ‘ for the government.

    With the Calais situation on the agenda again, why are the Brexit backing politicians not demanding that the UK Border is moved back to Dover, after all they wanted to ‘ control our borders’ ?

    • libertarian
      Posted January 17, 2018 at 1:40 pm | Permalink

      Blue & Gold

      Really

      Band D is £1452 per year

      Band H is £2536

      For EXACTLY the same services

      • Blue and Gold
        Posted January 17, 2018 at 5:47 pm | Permalink

        ……and people on Band H probably earn 10 times what the owner of a Band D property earns.

        You simply do not understand!!

        • Edward2
          Posted January 18, 2018 at 8:26 am | Permalink

          Not necessarily.
          The fact you live in a house that has a higher value than the one across the road doesn’t mean you have more cash coming into your household.
          The house across the road might also need far more council services than you do.
          Finding cash each year to pay a tax based on the value of an asset isn’t easy for a lot of people.
          Especially when that tax goes up every year more than your income does.

      • Mark B
        Posted January 17, 2018 at 5:58 pm | Permalink

        The solution is simple. A tax upon every person but paid to the Councils via central funding. People who are in work carry a premium, whilst those out of work results in the councils getting roughly half. Same too with retired people. This means, those councils that have people who do not work or pay taxes are worth less to the councils. Those in work and do pay taxes are worth more.

        So it is in the interests of all to make sure that people are working and contributing.

        The advantages to the people is, the central government sets the levy, and it is deducted at source stopping the disparity between councils.

    • acorn
      Posted January 17, 2018 at 4:44 pm | Permalink

      B and G. Remember that Council Tax is half Thatcher’s Poll Tax and half old fashioned Domestic Rates. In England Band A is six ninths Band D and Band H eighteen ninths of Band D; a fixed formula that creates the headline “Band D equivalent” for precept calculations. Council Tax only covers about 16% of of Local Government spending. Local government spends about a quarter of all government spending.

      A 1% cut in Central Government funding to Local Government (which is easily disguised from the voters), needs a 6% increase in Council Tax to stay even. Hence it is very easy for Central Government to blame Local Government for Council Tax Increases.

  15. dennisambler
    Posted January 17, 2018 at 11:48 am | Permalink

    I read that one of the items in deciding the rate of inflation is computer games. I am pleased to report that I am not crrently affected by inflation.

  16. acorn
    Posted January 17, 2018 at 11:53 am | Permalink

    In 2017, prices in the UK have followed a broadly similar trend to those in France and the EU as a whole but have been increasing at a faster rate, with UK prices increasing by 3.5% over the course of the year. Equivalent data for the other countries are only available until November 2017, over which period UK prices increased by 3.2% compared with an increase of only 2% in the EU as a whole, 1.2% in France and 1.6% in Germany.

    […] this trend has been sustained over the longer-term, with prices for each country and the EU as a whole being compared with their 2007 average. Between January 2009 and December 2017, the UK CPI grew by 23.6% whereas between January 2009 and November 2017 – the latest month for which data are available – prices in the EU as a whole grew by only 14.6% and those in Germany and France grew by 11.1% and 12% respectively. (ONS: Prices economic commentary: January 2018.)

  17. Iain Gill
    Posted January 17, 2018 at 12:31 pm | Permalink

    Bogus stats John.

    I really worry that decision makers make decisions based on this stuff.

    One of the things Norman Lamont got correct in his autobiography was how bad and inaccurate the statistics he and the government were presented with. My own first hand knowledge on the fringes of the public sector confirm this is still the best analysis.

    As ever the stats will be excluding housing costs, costs of having to go private for medical care as the NHS completely fails to deliver care when needed, and so on, which make up a real and important part of real peoples expenses.

    • Stred
      Posted January 18, 2018 at 6:42 am | Permalink

      Housing is now included. Probably one reason why inflation went up and as rents have been falling, reduced slightly.

      • Iain Gill
        Posted January 18, 2018 at 11:36 am | Permalink

        They wont be included accurately, thats for sure.

        These stats may as well be random numbers, they are that far off.

  18. Rien Huizer
    Posted January 17, 2018 at 12:31 pm | Permalink

    That inflationary spike was always expected to last only as long as the real exchange rate (or trade weighted exchange rate) of GBP would be declining. It has been level for a while now hence primary CPI inflation should come from other sources, like gvt. Follow on inflation (as a result of wage increases over productivity (not the case yet) would be further away. Nevertheless, interest rates are much too low for normal conditions. I suspect the BoE is holding interest rate action in reserve should there be new expectations that the UK will be leaving the EU in fact (and not in name).

  19. Fed Up and Angry
    Posted January 17, 2018 at 12:36 pm | Permalink

    https://ieconomics.com/united-kingdom-money-supply-m2#

    UK M2 money supply grew by ~0.28% in October 2017 so I think these inflation figures seem broadly in line with the M2 growth. There was a surge in M2 money supply after the referendum result – not doubt aided by the printer in chief at the Bank of England.

    Council tax is a complete rip off here in Surrey – why people keep voting for the same clowns in the county council is beyond me.

  20. mancunius
    Posted January 17, 2018 at 1:50 pm | Permalink

    The RPI figure which includes housing costs has been rising steadily and steeply for the past two years, since November 2015, and is now at 4.1% – its highest point since 2011.
    Some of the increase must obviously be down to devaluation: but a lot is the compounded result of absurd energy policies and the government’s cowardly pandering to greedy and inefficient local government which has pursued a stubbornly propagandist line by deliberately slashing front-line services to catch the citizens’ attention, rather than economising on admin and improving communications. A more courageous government would say, as Thatcher did, ‘No, look, you’re just messing around; here’s what you must do…’ But it seems no minister is able to see through the barrage of excuses.

    Abolishing Class 2 NICs and hiking Class 4 (from April 2018) will put additional pressure on the less well-off self-employed, of whom there are now squillions. All that’s needed is for HMRC to insist on taking lots more of their money in advance, even when they make peanuts.

    • mancunius
      Posted January 17, 2018 at 1:52 pm | Permalink

      I meant to add to that final sentence: “All that’s needed is for HMRC to insist on taking lots more of their money in advance, even when they make peanuts, *and the damage will be complete.*”

  21. turboterrier
    Posted January 17, 2018 at 3:59 pm | Permalink

    Dearer electricity featured as an upwards pressure, which is the result of the big switch away from cheaper carbon based generation.

    Refreshing to read the independent report by Professor Dieter Helm for the Government that seems to clearly state that those who cause high prices and unreliable supply should pay for the infrastructure to accommodate their inefficient and costly generation methods.

    Who will take that on board within the government? You will not see a rush to change the sermons and beliefs of the Church of Renewable Energy, the congregation aka the population will still have the responsibility of filling the collection bags no matter how many of them are suffering from fuel debt and poverty.

  22. Li Jun
    Posted January 17, 2018 at 4:00 pm | Permalink

    At least one garden & small holder seed company has frozen its prices for 2018. This is most welcome and the guy at the top says it will help persons on a fixed income in an environment where food prices in the shops are increasing.

    I do not know if P&P which the company cannot control are increasing. But our Post Office isn’t what it was is it.
    How much does in cost to send a 99 Pence packet of radish seeds courtesy of the Royal Mail?

  23. Miss Brandreth-Jones
    Posted January 17, 2018 at 5:44 pm | Permalink

    The lst 2 blogs I have read , but really , off the top of my head don’t fully grasp the significance, due to my economic illiteracy. Perhaps you can point out why this is good.

  24. Chris
    Posted January 17, 2018 at 8:08 pm | Permalink

    Why is Theresa May giving in yet again, Mr Redwood (“on verge of” paying more money to France for Calais and accepting more migrants). Sadly, we all know the answer. She is weak, and in my view lacking knowhow and wisdom. She is simply not up to the job and has proved a disaster:
    https://www.thesun.co.uk/news/5356824/theresa-may-is-set-to-pay-extra-cash-to-france-and-welcome-more-child-migrants-to-keep-uk-border-posts-in-calais/

    • Stred
      Posted January 18, 2018 at 6:48 am | Permalink

      It’s like having a senile relative going to the door when you are out and dealing with unwanted doorstep salesmen.

  25. Prigger
    Posted January 17, 2018 at 8:47 pm | Permalink

    Is the ONLY way of getting some Conservative MPs to respect basic democracy, one lone “pathetic” pencil cross on a piece of paper exercised just ONCE by way of the Referendum vote, to pay them a Cabinet Minister’s salary?

  26. John
    Posted January 17, 2018 at 9:52 pm | Permalink

    Fantastic news. We suspected it would arrive but good it has as there is always that bit of uncertainty.

    So we have:

    Record employment
    Record low unemployment
    Record manufacturing
    Record exports
    A BOOMING City of London
    Booming construction, record construction of offices and homes!
    Falling inflation
    Rising wages for the lower paid

    Oh and stagnant wages for the well paid. Hence why the pro EU and Labour Westminster Bubble people are up in arms because they don’t care about society.

    Fantastic news!!

  27. Prigger
    Posted January 17, 2018 at 10:54 pm | Permalink

    French President Macron’s idea of loaning us his old second-hand tapestry is something we in our second heaven about.

  28. A good day!
    Posted January 18, 2018 at 1:06 am | Permalink

    I witnessed the Dow today surging from a tiny downturn all through today but it then made a broadly based surge just as MPs voted on the final reading of the EU Withdrawal Bill. No connection. I don’t work within the BBC mindset.
    The Hang Seng Index was a bit lazy yesterday too but after closing surged and broke its all time record..which says something as it was a Chinese Emperor 10,000 years ago who nationalised a coal mining company. So ,they’ve known about Socialism aeons before Karl Marx lived the ultra rich life of Riley as a lawyer. Didn’t like it..twice over!

  29. A good day!
    Posted January 18, 2018 at 1:45 am | Permalink

    Correction it may have been SEHK, ( The Hong Kong Stock Exchange and not the close of play of the Hang Seng Index. I shall study Chinese then not make errors. First, I shall have a word with them about their alphabet.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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