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I posted this video on YouTube this morning. In it I suggest that this week’s inflation data will show what I have predicted for a long time — that without any help from the Bank of England, Rishi Sunak, or Jeremy Hunt, inflation is going to be back down to 2 per cent.

The inflationary shocks resulting from the start of the Ukraine war two years ago have worked through the system, and price increases have returned to a normal level.


Core CPIH (excluding energy, food, alcohol and tobacco) rose by 4.7% in the 12 months to March 2024, down slightly from 4.8% in February; the CPIH goods annual rate slowed from 1.1% to 0.9%, while the CPIH services annual rate was unchanged at 6.0%.
Core CPI (excluding energy, food, alcohol and tobacco) rose by 4.2% in the 12 months to March 2024, down from 4.5% in February; the CPI goods annual rate slowed from 1.1% to 0.8%, while the CPI services annual rate eased slightly from 6.1% to 6.0%.

He expects inflation to halve in a month?

And yes, Core is the policy relevant measure…..

14 thoughts on “Sigh”

  1. Services inflation is running at 6%

    Much the same as the eurozone and the US

    Long way to go yet

  2. If Vlad hadn’t invaded Ukraine there wouldn’t be / have been any inflation….. Rilly?????

    That’s the government line, so I’m surprised the LHTD is parroting it.

    Of course, printing half a trillion quid and throwing it at the victims of lockdowns had absolutely no effect on inflation. No, not at all.

  3. I imagine the repellent Potato had a sticky “happy ending” after reading this today:

    Raid inheritance and tax electric cars to bring down debt, says IMF

  4. BiW

    Don’t forget of the five primary causes of inflation

    – Lockdown and other COVID measures
    – Unlimited immigration
    – The Ukraine War
    – Net Zero and the cost of transition
    – QE and the legacy of it over decades

    It’s only number three that Murphy hasn’t supported unequivocally so he knows he is on the hook for all the impacts of that inflation. I’d be very surprised if it doesn’t resurge at some point in the next twelvemonths, and if his advice to cut interest rates by 80% immediately was followed it would surge back almost instantaneously

  5. Also is CORE the relevant measure? The cost of booze has skyrocketed since Sunak took over. Energy and food ‘Non-CORE’? All three absorb a significant amount of my outgoings – certainly any candidate that promise to halve excise duty on booze and transfer the tax burden to public sector pension reduction or a specific tax on public health advocates would be guaranteed my vote.

  6. @VP

    Doesn’t make it policy-relevant though, does it? Just makes it important. “Lived experience” and all that. Central bankers and politicians have an annoying habit of making arses out of themselves by trumpeting core inflation going down at a time when non-core is really biting people. They could do with showing more humility about that. Twiddling policy levers to chase a target is only any good if the lever is connected to the target in some useful way – and that’s why central bankers messing around with interest rates to chase non-core inflation would be pure folly. The policy-relevant stuff, the stuff they can do something about and need to focus on, is core inflation. They would do themselves some favours if they dropped their masters of the universe act and admitted their limitations on non-core inflation, and acknowledged some of the real pain and even hardship it brings to people. But if any of them adopt the idiocy of treating it as a policy target, I’d want them fired pronto.

    To the extent that anyone in power should be treating non-core inflation as a component of the “cost of living crisis”, it should be the treasury and hence the politicians, rather than the central bankers. Taxes and duties are part of the pain. You could even campaign for further energy price guarantees stumped up from the public purse, though that wouldn’t be very on-brand for this blog. Maybe the failure to throw excessive regulations on the bonfire, or the lack of unilateral free trade, would be a more liberal/libertarian way to put downwards pressure on prices…

  7. Is taxation itself included in the inflation basket?
    Genuinely don’t know and at first thought the arithmetic seems quite hard – those 8%+ pay rises for pensioners last month, and 6.7% for the job seeker element of Universal Credit for example have to come out of the total compensation in the economy – the real gain is less but it’s still a +ve number.
    Made up example: If my (PAYE+NI+NI) tax bill has risen from 16k to 20k due to fiscal drag in the last 2 years, then that’s a nominal 20% increase in the cost of me getting government, probably a 6-7% real rise.
    This could tie in with something TW has mentioned on substack – inflation feels a lot higher than the official measure and although the hordes aren’t revolting, they don’t like the government lot they’ve currently got as much as they normally would when there’s a bit of growth and lots of jobs about.

  8. Theophrastus (2066)

    In the Telegraph, Roger Bootle is also predicting that UK inflation wil fall to c.2% this week…

    “But the proximate reason for the big impending drop in inflation on Wednesday is what happened at this time last year. Last April there were large rises in prices, pretty much across the board, reflecting adverse international influences on energy and food prices. These large rises will fall out of the annual comparison and this April’s price rises should be smaller. The 12.3pc drop in the Ofgem price cap on April 1 this year will on its own reduce inflation by 0.4pc. In addition, food inflation seems to have fallen sharply.

    “Forecasting inflation for the next month or two is largely a matter of arithmetic. What happens thereafter, though, is about economics. And the outlook is not all plain sailing.”

  9. And Roger’s usually in the money – what this doesn’t mean is that Murphy’s policies become any less absurd – indeed it becomes even more essential to begin those vast cuts to academia and the public sector before straitened circumstances make it essential. All jobs related to Big Trans, Net Zero and Diversity to go. 40
    Universities closed to new intakes and shuttered. Massive cuts to the Non- productive public sector and switch away from defined benefit schemes – huge increases
    To ISA allowances. Reintroduction of MIRAS, plural voting for Private Sector employees. The list is endless.

  10. Bloke in North Dorset

    Inflation may come down and even stay down, but it’s going to take people a long time to get used to the new price levels and treat them as the new norm. Politicians bragging about bringing inflation down is just rubbing our noses in it.

  11. The inflationary shocks resulting from the start of the Ukraine war two years ago have worked through the system, and price increases have returned to a normal level

    Really angers me that those who supported lockdowns, inc msm, still repeatedly trot lies that inflation and myriad other problems are due to Russia – Ukraine war or the ‘Pandemic’. Lockdowns and QE are the cause, plus other Govt interference such as minimum wage

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