Inflation

[Itsallaguess]

Inflation eases for third straight month -

Falling transport costs meant UK inflation slowed for the third month in a row in January, reducing pressure on the Bank of England to make more large rate rises.

The consumer prices index rose by 10.1pc year-on-year in January, meaning inflation has now cooled by a whole percentage point since it hit a 41-year high of 11.1pc in October 2022.

This was a drop from the 10.5pc rate recorded in December and means inflation has slowed in line with the Bank of England's expectations.

Inflation is slowing more quickly than many analysts expected. The consensus expectation amongst City economists was that CPI in January would be 10.3pc.




Source - https://tinyurl.com/2om58h7f

Link to ONS Consumer price inflation report for January 2023 -

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/january2023

Cheers,

Itsallaguess

[Tedx]

I dont see why its 'falling more than expected'.

Wages rises have been suppressed, Gas prices have plummeted ,Vlad is being mauled in Ukraine, the Chinese have decided to live with COVID and, most visibly the prices at the petrol station I drive past every day have fallen sharply.

I'm no economist but....sheesh.

[Itsallaguess]

I dont see why its 'falling more than expected'.

Wages rises have been suppressed, Gas prices have plummeted ,Vlad is being mauled in Ukraine, the Chinese have decided to live with COVID and, most visibly the prices at the petrol station I drive past every day have fallen sharply.

I'm no economist but....sheesh.

Well if you're trying to suggest that these very often 'politically motivated' economists and forecasters, who seem to take so much glee from selling this country down the river over recent years, might have to then rapidly walk back on their previous doom-laden forecasts once the data begins to scupper them, then I couldn't possibly comment...

:O)

Cheers,

Itsallaguess

[Tedx]

You're far too young to be so cynical. Me on the other hand......

I wonder whatever happened to the 14% inflation forecasters. Probably working at the Bank of England.

....whose interest rate rises have done nothing to bring down inflation.

[1nvest]

Current year on year inflation figures are ... history

Recent inflation and ...

RPI Index Dec 2022 360.4
RPI Index Jan 2023 360.3

RPI has flattened, near 0% (slightly negative) recent inflation (deflation).

RPI Index Dec 2023 of 367.5 ... and year on year RPI would be down at 2% Bank of England remit target rate. After recent quite high increases in prices, there is the potential that further increases might slow, could even flat-line or maybe even decline back down some ... and see year end 2023 year on year of deflation.

CPIH Index Dec 2022 125.3
CPIH Index Jan 2023 124.8

Inflation including housing has declined, and could decline further (driven by higher interest rates).

CPI Dec 2022 127.2
CPI Dec 2023 126.4

Same story there also, down (deflation).

[vand]

It's a good print imo. While the headline rate is still over 10%, the lower core number will eventually feed through over the coming months. Our CPI numbers were a few months behind the US on the way up, and they'll lag on the way down too.

The disinflation back towards trend will probably come in 2 stages - a fairly quick drop below 4% this year so that people's real incomes are no longer declining, but after that a number of years where people continually push for higher wages to compensate for all the lost purchasing power they've experienced over the last couple of years which will keep inflation hovering higher than target for a long time.

[stevensfo]

You're far too young to be so cynical. Me on the other hand......

I wonder whatever happened to the 14% inflation forecasters. Probably working at the Bank of England.

....whose interest rate rises have done nothing to bring down inflation.

Well, to be fair, RPI did reach 14% last October and November.

Steve

[dealtn]

...the Bank of England.

....whose interest rate rises have done nothing to bring down inflation.

Leaving aside the fact it isn't the Bank of England that sets interest rates, where do you think inflation would be now were policy rate to have remained at 0.1%?

[Tedx]

...the Bank of England.

....whose interest rate rises have done nothing to bring down inflation.

Leaving aside the fact it isn't the Bank of England that sets interest rates, where do you think inflation would be now were policy rate to have remained at 0.1%?

You're the expert. You tell me.

[dealtn]

...the Bank of England.

....whose interest rate rises have done nothing to bring down inflation.

Leaving aside the fact it isn't the Bank of England that sets interest rates, where do you think inflation would be now were policy rate to have remained at 0.1%?

You're the expert. You tell me.

I wasn't the one making the claim

...the Bank of England.

....whose interest rate rises have done nothing to bring down inflation.

but seeing as you ask I would say it would be a little bit higher. Reducing demand has reduced, at the margin, the price rising nature of that original level of demand.

So do you disagree, and if so can you explain why? This is the Economy Board after all.

[Tedx]

Well I've said it before. The price of energy and supply chain issues post COVID stoked inflation.

The price of energy has come down and the supply chain issues are sorting themselves out. I think this would have happened without the interest rate rises.

Interest rate rises disproportionately punish those of moderate means and reward those with money. And banks. I know you disagree, but you're wrong. Sorry

[dealtn]

Well I've said it before. The price of energy and supply chain issues post COVID stoked inflation.

The price of energy has come down and the supply chain issues are sorting themselves out. I think this would have happened without the interest rate rises.

Interest rate rises disproportionately punish those of moderate means and reward those with money. And banks. I know you disagree, but you're wrong. Sorry

I am not disagreeing that commodity price rises have an inflationary effect.

I am not making the claim that something else had NO effect. You are. I have politely asked you to justify that claim. You have chosen not to.

Just because you disagree with me doesn't, by default, make me wrong.

[servodude]

Well I've said it before. The price of energy and supply chain issues post COVID stoked inflation.

The price of energy has come down and the supply chain issues are sorting themselves out. I think this would have happened without the interest rate rises.

Interest rate rises disproportionately punish those of moderate means and reward those with money. And banks. I know you disagree, but you're wrong. Sorry

I am not disagreeing that commodity price rises have an inflationary effect.

I am not making the claim that something else had NO effect. You are. I have politely asked you to justify that claim. You have chosen not to.

Just because you disagree with me doesn't, by default, make me wrong.

I don't think anyone implied there was an ipso facto relationship

I does feel as thought the interest rate rises have been at best precautionary i.e. to prevent inflation pursuant to any wage increases that might be required, or negotiated, due to the inflation caused by the energy cost spike (and other supply side constraints)
It's hard to see how they have not made the immediate situation worse for many, while not addressing the actual cause of the problem
It might well all come out in the wash over the next few months - but it will probably have made a whole bunch of folk a lot more miserable and aggrieved than they needed to be
But then the BoE (and other central banks) only have the one hammer to work with and exist to a good degree to absorb responsibility from governments

[tjh290633]

Noteable that both CPI and RPI actually fell from the December Values:

For RPI:

Month        Index    Factor   Monthly   Annual
01-Dec-22    3.604    1.000      0.59%   13.44%
01-Jan-23    3.603    1.000     -0.03%   13.41%

and for CPI/CPIH:

Month     CPI       Annual   Monthly   Rebased   Monthly   CPIH    Monthly   Annual
       
2022 12   162.81    10.51%     0.39%     127.2     0.39    125.3     0.40     9.24%
2023 01   161.79    10.01%    -0.63%     126.4   (0.63)    124.8   (0.40)     8.90%

"Rebased" is the published number for CPI, but I convert it to the original base in the column headed "CPI".

TJH

[1nvest]

Noteable that both CPI and RPI actually fell from the December Values:

For RPI:

Month        Index    Factor   Monthly   Annual
01-Dec-22    3.604    1.000      0.59%   13.44%
01-Jan-23    3.603    1.000     -0.03%   13.41%

and for CPI/CPIH:

Month     CPI       Annual   Monthly   Rebased   Monthly   CPIH    Monthly   Annual
       
2022 12   162.81    10.51%     0.39%     127.2     0.39    125.3     0.40     9.24%
2023 01   161.79    10.01%    -0.63%     126.4   (0.63)    124.8   (0.40)     8.90%

"Rebased" is the published number for CPI, but I convert it to the original base in the column headed "CPI".

TJH

See viewtopic.php?p=568432#p568432 ↑↑↑ earlier

[GrahamPlatt]

Interesting graphic

https://digg.com/finance/link/global-in ... 0h38mhwxNN

[funduffer]

Of course these annual inflation indices (CPI, RPI etc.) are calculated annually based on the previous 12 months' price changes. So, when next month's change of prices is announced, February 2022's will drop out of the calculation and February 2023's will be added. The really high monthly price increases last year were after the Ukraine war started (Feb 2022), so as these months gradually drop out of the calculation, we can expect large decreases in the annual indices, barring any new big shocks to the system.

Assuming this, we may well see very low inflation, maybe even deflation, by the start of 2024 as the high 2022 monthly values wash out.

Since most of the factors that have caused this big inflation spike are 'supply side' factors - oil, gas, food, labour, micro-chips etc., I suspect what the BoE has done with interest rates will have had only a minor effect. You could argue all it will do in raising bank rate is to prolong the recession as people with mortgages will have less to spend. So, I agree, its actions are precautionary only. With wage rises lagging inflation (particularly in the public sector), I can't see how we can avoid a recession, unless people withdraw and spend their savings.

The special 'UK' factor in all this may be the shortage of labour, which might cause wages to rise more than in other countries and keep our inflation comparatively higher. Unless we see a lot of the 'economically inactive' return to the labour market (which I have my doubts about), then we may well have a labour shortage, unless we open up our borders to higher immigration. I am sure most of those asylum seekers waiting for the Home Office to decide their fate would welcome a chance to work!

Long term investment and higher productivity are of course the real answer to improving our economy, but these won't have much effect over the next year, because investment has been so dire in recent years.

I predict Rishi Sunak will easily meet his pledge to halve inflation this year, but not due to any action his government has taken!

FD

[Tedx]

Andrew Bailey, the Governor of the Bank of England, delivered a speech this morning on the cost of living. His conclusion was:......

https://www.taxresearch.org.uk/Blog/202 ... est-rates/

[Alaric]

Of course these annual inflation indices (CPI, RPI etc.) are calculated annually based on the previous 12 months' price changes. So, when next month's change of prices is announced, February 2022's will drop out of the calculation and February 2023's will be added. The really high monthly price increases last year were after the Ukraine war started (Feb 2022), so as these months gradually drop out of the calculation, we can expect large decreases in the annual indices, barring any new big shocks to the system.

On a month by month basis, prices have stopped increasing and may even have fallen. You see this every time you pass a petrol station.That's not to say that supermarket prices aren't continuing to be shockingly high compared to the last few years.

It may not last as April will see price increases where organisations have built price changes by "inflation" into their contracts, thereby ensuring it continues.

[Tedx]

Goldman Says UK Inflation to Sink Below BOE’s 2% Goal This Year

Tumbling natural gas prices set to deliver sharp drop in CPI
Goldman’s forecast is lower than any other in Bloomberg survey

https://www.bloomberg.com/news/articles ... #xj4y7vzkg