Inflation Hits Bank of England Target

The above chart shows the Consumer Price Index over the last 5 years – the Bank of England is mandated to target 2%, a target it has not hit since 2013. The fall in the pound has imported inflation, raw materials in particular are up some 20%. Expect to see a lot of doom and gloom in the FT about about inflation outstripping wages and hitting Brexit voters. Up to a point…

This currency hit to inflation is a one time hit, it will fade with time. As the chart above shows in red, inflation has been below the target for 5 years, with the governor of the Bank of England making regular excuses in letters to the Chancellor. This was Mark Carney last year:

“The underlying causes of below-target inflation over the past two years have been: sharp falls in commodity prices; the earlier appreciation of sterling; and, to a lesser degree, the subdued pace of domestic cost growth.”

The underlying cause of the rise in inflation today is, conversely, rising commodity prices, the fall in sterling and the stronger than expected economy. The recent period of food price deflation was not normal. By 2019 the currency effect on inflation will have faded. If of course the economy was to go down the pan as Project Fear warned, inflation pressures would fall…




Tip offs: 0709 284 0531
team@Order-order.com

Quote of the Day

Jeremy Corbyn on Big Ben Bong Ban

“… if we have to miss Big Ben in reality for a while so that work can be done, well, that’s something we have to go through. It’s not a national disaster or catastrophe.”

Sponsors

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.
Fears For Chapman Fears For Chapman
Why Transition Must Be Short Why Transition Must Be Short
PICTURES: Seumas’ Temper Tantrum PICTURES: Seumas’ Temper Tantrum
Don’t Believe ‘Victory For Hammond’ Spin Don’t Believe ‘Victory For Hammond’ Spin
Friday Caption Contest: Commando Chappers Edition Friday Caption Contest: Commando Chappers Edition
Angry Adonis Wanted ‘Office for Students’ Job Angry Adonis Wanted ‘Office for Students’ Job
Listen: Rees-Mogg vs Chapman Listen: Rees-Mogg vs Chapman
City Envoy Slams “Bewildering” Brussels City Envoy Slams “Bewildering” Brussels
Labour Pledged to Sell-Off Public Land Labour Pledged to Sell-Off Public Land
Corbyn’s ‘Local GPs’ Visit Staged by Labour Spin Doctor Corbyn’s ‘Local GPs’ Visit Staged by Labour Spin Doctor
Joly-Gone: Maugham Deletes Centre Party Plan Joly-Gone: Maugham Deletes Centre Party Plan
Milne: North Korea ‘Rational’ to Have Nukes Milne: North Korea ‘Rational’ to Have Nukes
LibDem Chief Exec Out LibDem Chief Exec Out
Jones Ditches Momentum For Radio Show Jones Ditches Momentum For Radio Show
Chlorine Chicken? EU Mired in Food Safety Scandals Chlorine Chicken? EU Mired in Food Safety Scandals
Juncker’s Junkets: Commissioners’ €500,000 Expenses Juncker’s Junkets: Commissioners’ €500,000 Expenses
Owen Jones in for Nawaz on LBC Owen Jones in for Nawaz on LBC
Watch: Maduro’s Thugs Executing Opponents Watch: Maduro’s Thugs Executing Opponents
Inside Baroness Scotland’s Home – But No Pictures Allowed Inside Baroness Scotland’s Home – But No Pictures Allowed