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Core inflation is what matters

Core inflation is what central bankers look at. For, given that they’re not idiots, they know that food and fuel can bounce around wildly in price.

Overall, this is the trend in inflation (there isn’t a CPI chart, this CPIH one will do):

Inflation is falling.

It will continue to fall, overall.

When energy prices fall in April, that will become very apparent.

  Or as ONS actually said:

Core CPIH (excluding energy, food, alcohol and tobacco) rose by 5.2% in the 12 months to December 2023, the same rate as in November

Core inflation is high and isn’t falling….

Remember, this man teaches at a British university.

14 thoughts on “Core inflation is what matters”

  1. There’s a few bods in various Banks seem to agree it will moderate out. I’m an inflation hawk so naturally I disagree with him.

    – The Red Sea attacks will lead to increased freight charges which will be passed on
    – The impact of MMT will continue to be felt as people seek ever more risky assets to obtain yield
    – Net Zero will lead to rolling power cuts which will heavily impact on production of basic necessities.
    – The likely social dislocation with robberies and theft increasing exponentially and the authorities likely to not prosecute wrongdoers will mean you probably have to replace items two or three times at your own expense each time
    – A city the size of Birmingham is gathering in Africa and SE Asia on the way throughout 2024 to expect free housing and other benefits which we don’t have – that all costs
    – The government continues to systematically penalize law abiding and conscientious people legally, in employment and across all aspects of its activity – the resultant loss of morale means productivity continue to collapse and the resultant money printing will cause inflation. This is likely to be intensified if Labour gets into power

    So there’s plenty of countervailing trends – the caveat is you could see the total collapse of the UK in terms of the complete breakdown of basic services and large scale unemployment which would be disinflationary in some ways but the counter is that the way this will be met is through MMT which would most likely result in something akin to Zimbabwe under Mugabe. As the great BiS says, it is Murphy’s world and we only live in it.

    For him the end of the road is Harare or Pyongyang (or a combination of the two with a ‘woke’ twist) and it has been ever since Tim first introed him to me 13 years ago…

  2. Slightly OT, but does anyone else find this recent trend to using gradients of the some colour in graphs extremely annoying. Take the graph above; it takes close investigation to check the difference between CPIH and Services. Why not use red, blue, orange, gree? Or differently dashed lines?

  3. I understand why core inflation is focused on for many/most economic discussions, but in the political/public opinion world telling people to ignore huge increases in the cost of food, gas, electricity, etc. – yeah, good luck with that.

    Emil is spot on – you may be sinking slower, but you’re still sinking.

  4. Core inflation rose by 5%? So it’s now 10%? Or do they mean that core *PRICES* rose by 5%, so core inflation *IS* 5%.

    I’m also looking forward to people complaining “you say energy inflation is now 0%, but why haven’t my bills gone down?!?!?!?”

  5. Another of Spud’s talents has been revealed. He’s a mental health expert and able to diagnose from across the Atlantic.

    “I have on many occasions in life been asked to decide if a person has mental capacity

    The criteria are both hard to define and easy to understand

    Biden is not senile. He undoubtedly has capacity…”

  6. Bloke in North Dorset

    Whatever happened to Mr Ecks?
    As far as I’m aware he’s not been around since the peak of Covid. The way he was going, even by his usual standards, he probably worked himself up in to a mental breakdown or possibly worse.

  7. BiND

    Thanks for the update. I suppose with that level of vexation it’s a fair call to say he ended up in some state.

  8. ‘Stuart Richards’ has managed to get a post on Spud’s latest Wealth Tax thread, to challenge Pilgrim Slight Return on his desire to pay extra taxes towards his pension.

    Watch this (that) space.

  9. Out of interest Austria’s inflation is 7.8%
    Energy costs have pushed this up.
    Own fault, there is 30 years of shale gas available to them.

  10. Otto

    I remember reading that Hitler complained about that in WW2.

    So the problem still hasn’t been fixed, eh.

  11. The bidenadministration actually tried telling everyone that the problem wasn’t inflation, it was high prices!

    Who’s gonna tell them?

  12. An institution that calls itself a University; it also calls itself”City” when it is actually in Islington …

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