UK inflation tumbles, real incomes rise

On the government’s preferred measure of inflation, CPI(H),  March brought the figure down to 2.3%. On the CPI measure excluding housing it fell to 2.5%. This means real wages and incomes are rising faster than many commentators realised.

It is a reminder how competitive conditions are in retail, with continuing downward pressure on prices from excess conventional shop capacity and fierce discounter and internet competition.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.

30 Comments

  1. Ker-bank
    Posted April 18, 2018 at 11:20 am | Permalink

    It is a regular occurrence that the BoE is surprised. As they are always surprised perhaps they might predict being surprised and act appropriately like proper bankers.

  2. Lifelogic
    Posted April 18, 2018 at 11:27 am | Permalink

    This despite the large increases in council tax, Hammonds 20% increase in insurance IPT tax, the absurd stamp duty rates and all the rest of the increases in taxes, fees, motorist muggings and other costs coming in from this bloated government at all levels!

    • a-tracy
      Posted April 19, 2018 at 9:35 am | Permalink

      Lifelogic, I hear you complain all the time about the government’s new taxes, but you never defend and congratulate control measures. Esther McVey took a beating from the Scots defending the two child benefit policy which I’m sure you’re more than in agreement with (do you think people shouldn’t get child benefit at all?). Then MPs take a battering on policies designed to persuade people living fully on housing benefits to down-size from properties given to them when their needs were different, why should the taxpayer pay for a three bedroomed home for a parent or parents once the children have left home and that home is required for another family coming up behind them, if they can afford the full rent and want to stay there and pay it fine, but if they expect everyone else to pay this should be easily defendable.

      You expect your Tory government to take all the difficult decisions on controlling benefits but the minute they start asking for proof of authentic benefit assessment and the left give-away-merchants start bouncing on their heads all of the taxpayers alliance people just back off and leave one person to be targeted by a mob like McVile bashing which leaves me with a bad taste in my mouth.

      Scottish taxpayers – all need to be asked by Holyrood do you want people to claim enhanced benefits for having more than two children in Scotland if you do it will cost you x (a new tax from your PAYE the same for all employees and self-employed alike) and let their public decide they have their own tax-raising powers and this should be pointed out to them, in England we don’t need the population growth perhaps they do.

  3. Lifelogic
    Posted April 18, 2018 at 11:38 am | Permalink

    Electricity costs would fall very considerably too if they government cut the green crap and their very foolishly organised smart metering agenda. Large train & transport price increase too essentially from Government also Sadiq Khan’s extra congestion tax and parking surcharges for many.

    Government is the problem as it usually is.

    • GY
      Posted April 18, 2018 at 5:30 pm | Permalink

      Plus we should be fracking away ASAP.

      If only we could remove our idiot politicians & replace them with sensible members of the public.

      • APL
        Posted April 19, 2018 at 11:08 am | Permalink

        GY: “If only we could remove our idiot politicians & replace them with sensible. ”

        A good start would be to abolish salaried MPs. The idea has been an unmitigated disaster.

  4. duncan
    Posted April 18, 2018 at 11:40 am | Permalink

    It isn’t inflation that’s fallen it’s the rate of inflation that’s fallen. Your primary assertion is incorrect. It is important people appreciate the difference between what is correct and what it is political. The two very rarely coincide

  5. duncan
    Posted April 18, 2018 at 11:43 am | Permalink

    Insert commas as appropriate – my grammar is appalling. I believe some call it ‘comprehensive’ education and represents an example of political language designed only to deceive

  6. frank salmon
    Posted April 18, 2018 at 11:47 am | Permalink

    Inflation down, employment up, unemployment down, growth better than forecast, the pound up against the dollar and euro. Wages rising faster than inflation. Inflation falling. Confidence about Brexit rising. The number of mortgages issues is increasing…….
    Not that you would know from today’s papers and the media….

  7. Lifelogic
    Posted April 18, 2018 at 12:19 pm | Permalink

    We can (and should urgently) lower inflation further and become more competitive by getting out of the common customs tariff. Also there is a huge win, win available on inflation and productivity from cutting all the pointless over regulation of almost everything and the absurd tax complexity.

    Also get some competition in banking they are a joke. One of the large ones has O/D fees at up to 68% APR even for solid customers (when base rates at 0.5%) where is the competition authority?

    • WA Laugh
      Posted April 21, 2018 at 3:42 pm | Permalink

      Indeed a bank has a 1p per £7 per day as overdraft fee, which for larger overdrafts can go to 68% annual fee.
      But who would be stupid enough in those conditions to keep such an overdraft for a year? LL possibly?

  8. Beecee
    Posted April 18, 2018 at 1:07 pm | Permalink

    I think Mrs May is finally finding her feet.

    Not helped by the BBC which twice on today’s 1 pm news showed Mt Corbyn calling her and her government ‘callous’ but not Mrs May’s response and deserved put down!

    • Hope
      Posted April 18, 2018 at 5:32 pm | Permalink

      May admitted to following Labour’s decision without changing the decision and then in 2014 legislated that would disenfranchise those poor people! Hardly a success, but dimwit Corbyn not quick enough to reply.

      May and Rudd should hang their heads in shame, one disaster after another! Rudd blaming the Home Office, I thought there was a convention not to blame the pro EU civil service trying to thwart Brexit? There are even false claims that Brexit MPs are trying highlight Rudd’s failings! It is obvious to everyone and nothing to do with Brexit. She made awful unsubstantiated comments about Johnson on TV and was then put in charge of hate crime!

  9. Adam
    Posted April 18, 2018 at 1:12 pm | Permalink

    Each Remainer realises
    Our buying power rises
    British spirit & might
    Show we’re doing all right
    Such a win: Brexit enterprise is

  10. alan jutson
    Posted April 18, 2018 at 2:12 pm | Permalink

    Seems the High Street is now really suffering with car parking restrictions, and high charges for parking spaces, with ever increasing High Business Rate’s, and lower cost internet shopping activity and ordering on line.

    Soon the only thing left will be coffee shops, rendering High street stores almost pointless.

    Thus the touchy feely helpful advice type of shopping, will eventually and sadly, be lost.

    Who in their right mind would open a shop at the moment ?

    • Anonymous
      Posted April 18, 2018 at 6:08 pm | Permalink

      I no longer give to charity. Instead I make a point of paying extra for things in town.

      I frequent the pubs and restaurants, pay a bit over for my shoes and clothes and use taxis.

      It keeps my local community going and people in employment. Charity begins at home and it comes back to you anyway in the form of a better town and an improvement in your house value.

  11. margaret howard
    Posted April 18, 2018 at 2:58 pm | Permalink

    Time to rejoice indeed – the economy now depends on people buying more clothes ready for the spring! Should we call it the ‘Easter bonnet economy’?

  12. Dennis Zoff
    Posted April 18, 2018 at 3:04 pm | Permalink

    Reality Check:

    All this while UK Pensioners have the least to live on in western Europe; UK roads are in an appalling state of repairs; Our NHS is starved of resources; Limited money to care for our most vulnerable in society (poor, disabled and aged); Our local authorities reducing services across the board due to central Government cuts; UK’s housing crisis continues; Military security reduced; Policed forces reduced; Tax increases across the board; etc, etc. Under successive Governments the UK citizens have suffered badly…..now T. May is selling the UK down the river again and negating Brexit wherever possible!

    Is there no end to this incessant treachery?

    With reference to your comment: As they say “Perfect Operation, unfortunately the patient is dead!”

  13. James Matthews
    Posted April 18, 2018 at 5:28 pm | Permalink

    My gas bill just inflated by about 15%. Will have to buy a lot of cheap jumpers to balance that out.

  14. mickc
    Posted April 18, 2018 at 5:46 pm | Permalink

    But does the inflation measure take into account “shrinkflation”, where the price stays the same but the product is smaller? This has been particularly evident in recent years.

  15. John
    Posted April 18, 2018 at 6:37 pm | Permalink

    Wages have started to increase faster than inflation. The word is that the Bank of England will soon raise interest rates.

    Is raising interest rates so soon churlish?

    I know many will welcome it, I think I do but so soon to wipe out the benefit of some seeing the first rise in their pay over inflation for a decade or two?

  16. nigel seymour
    Posted April 18, 2018 at 6:53 pm | Permalink

    Hello John, I’m not the slightest bit interested in inflation – it goes up goes down.
    More important is the Lords are in report stage and rumour has it that they will be doing everything possible to stop brexit. So, it will come back to the commons to look at the amendments and will then be sent back to the unelected lords. I was very good at ping pong at my local youth club way back and won a medal or two…

    Anyway, As my MP I would like you to get your thinking cap on and start giving us some idea as to how the Lords will continue over the report stage vote and what will be the govs stance? It seems to me that we are playing into the hands of Barnier and will come up short on almost everything…

    Reply I assume the government will ask the Commons to vote the Lords amendments out! the Lords have not persuaded the government

    • graham1946
      Posted April 19, 2018 at 1:49 pm | Permalink

      Reply yo reply.

      Maybe not the government, but what about the others? Soubry and Starmer are both saying that in private they are being told more and more MP’s are coming to the view of the acceptance of ‘a’ Customs Union and feel they may get enough votes. No doubt they think that ‘a’ Customs Union’ rather than ‘the’ Customs Union will be enough to bamboozle voters and satisfy the Remoaners. It seems that under a weak PM they think they can do what they like. Will she issue a three line whip or prove what we all suspect that she doesn’t really want Brexit?

  17. Blue and Gold
    Posted April 18, 2018 at 7:00 pm | Permalink

    Lowest growth in the G7, UK bottom of the pile.

    Also, I’m sure all of those who believe in the Free Market will be delighted in the news that the contract for the new British Passport will not be challenged, and the UK tax payers will benefit from saving £120 million.

    • L Jones
      Posted April 19, 2018 at 4:46 pm | Permalink

      Another gleeful remainer, Blue and Gold?

  18. Eh?
    Posted April 18, 2018 at 8:12 pm | Permalink

    At the present rate of signing..about 75 signatures per minute, we will have 100,000 soon. Please sign and hopefully we can progress with honour into the 21st Century of democratic peoples and nations. This House of Lords nonsense is primitive, Dark Age.
    https://petition.parliament.uk/petitions/209433

    • Peter Parsons
      Posted April 19, 2018 at 7:53 am | Permalink

      As is the unrepresentative Commons, yet the solution proposed to the problem of the Lords from the likes of Jacob Rees-Mogg is to stuff it with 200 more unelected lackies, costing the rest of us an additional £60,000 per day plus travel and other expenses.

  19. Ron Olden
    Posted April 18, 2018 at 9:28 pm | Permalink

    I’ve been commenting for months on my FB Pages about how modest and short lived the effect of the substantial sterling drop and the monetary loosening following the Brexit vote had on inflation.

    In the past, the beneficial effects of sterling depreciations have tended to been dissipated in higher inflation.

    Not this time. The Brexit vote alone seems to have had beneficial effects without us having even left yet and already gone a long way to delivering the re-balancing of the economy, which is always talked about, but never delivered.

  20. Epikouros
    Posted April 19, 2018 at 6:42 am | Permalink

    The fear has to be serious deflation as this time around the government and BoE do not have the tools to deal with it. Considering the poor debt situation meaning that interest rates are not going to rise to historical norms then deflation is very much a possibility. If it happens then we will see the price of government in time of a downturn not allowing poor performing businesses to fail. QE will then be seen as not such a good idea and that the markets should have been left to perform their function and use their natural forces to deal with the problem so as not to store up worse for the future and restore an environment that would have allowed for greater and sustainable economic growth.

  21. a-tracy
    Posted April 26, 2018 at 3:51 pm | Permalink

    I look on the government and despair at the moment. Take back control, yet you give us people in control who are incompetent at best, complete and utter waste of money and time at worst.

    I’m sick of hearing about real time salaries reducing, what do you politicians expect when you have increased business costs multiple times, the 3% extra national insurance pension contribution renamed nest will reduce any increase gained, another 2% cost on employers. Fiscal drag on NI.

    Then the costs of compliance measures to take on government contracts then at times of cost-cutting they just get relaxed and cheaper none employing providers used to save money and our trained, employed staff can’t be maintained.

    Rudd and this immigration horror. What a lot of incompetence. The Conservatives shouldn’t promise manifesto improvements to immigration if you just aren’t able or capable to meet arbitrary targets your government suggested it’s false representation.

    The government is being made to look inept every week now. On Crime, on immigration, your people seem to think everything will just wash off the conservative representatives because voters have no real choice. I want to see more women in the powerful position but oh my goodness what wet, limp choices May has made in her senior officers.

  • 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.

  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page