November 16 2022 at 11:52 am
Whilst I agree that fuel and especially gas prices have played an important part in the current global inflation situation, I think you cannot simply blame the Ukraine war for it in isolation.
Russia invaded Ukraine at the end of Feb 2022. However UK CPI was already 5.5% by this point, pre-war, having risen from sub 2%.
This means that the war simply cannot be the cause of all the current inflation problem.
Moreover, to highlight the point, gas and oil prices have fallen significantly since their mid summer highs so if it was only energy prices then we would see inflation falling at least on a month on month basis, where in reality the opposite is true
Likewise, core inflation excluding food and energy is currently 6.5% in the UK, again pointing to the fact that inflation more broad based and is not solely caused by the effect of the Ukraine war.
So my point is, if inflation is solely because of the war, why where we already seeing high and rapidly rising inflation well before the war?
Richard Murphy says:
November 16 2022 at 1:36 pm
No one disputes that Covid played a role by a) allowing an artificial savings accumulation by some and b) because of a chaotic and too quick reopening. But that impact has now worked through
And you ignore that energy impacts on all prices
Your claim does not stack
November 16 2022 at 3:12 pm
Again I don’t disagree that lockdown and it’s end had an effect.
That said, I don’t know why you are calling the savings accumulation artificial. It is perfectly normal given people were limited in what they could do. Are you suggesting those extra savings should have been taken away from people by some manner?
But if savings accumulation was too great (and unleashed an inflationary wave as people were able to spend again) then essentially you are arguing that the money supply and velocity of money drive inflation. At which point you could also argue that huge government spending was also a massive driver of inflation by the same method.
I also don’t think lockdown reopening was chaotic, given it was phased over months and in four stages. Or are you suggesting that lockdown should not have ended, much as in China?
Either way you cannot simply blame inflation on the war when there was already high and rising inflation well before the war, which seems to have been driven by increased demand and increased money supply.
Richard Murphy says:
November 16 2022 at 3:54 pm
You think Covid was not artificial?
You think the rush to reopen was planned?
You think disruption to normal savings patterns might not be capable of having an inflationary impact without the reasons you ascribe?
And you think I should take you seriously? Sorry – bit I smell trolling 0- because these comments – like should we have been like China? – are obviously a wind up
You are now banned
Of course, disagreement is welcomed because that’s how people learn, mistakes are pointed out……