The UK inflation rate did not rise in May. It remains at 2.8%.
But, and I have made this point very many times before, one-month inflation data is always a little unreliable. In fact, just about everything from the Office for National Statistics now is a little unreliable, as they themselves would admit. Nonetheless, this is also a little surprising.
Fuel prices have increased dramatically in the last month, and they are a component of inflation, so an increase might have been expected. They did not, though. The message from this would appear to be clear, because it is impossible that those increases will not work through into inflation indices. The result is that the impact of the war in the Gulf, temporary ceasefire or not, is most definitely ongoing, and we have not, as yet, seen anything approximating the last of it.
Traders might be reducing spot prices for oil right now, but we know from experience that there is a significant lag between spot prices falling and retail prices following suit, and meanwhile, the impact of higher prices, and continuing global uncertainty, is going to continue to work through the economy for some considerable time to come, even if this peace holds good, and my doubts on that remain.
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I find the CPI inflation rate is meaningless when it comes to:
House price inflation
Mortgage rate inflation
Rent inflation
Council tax inflation
Water rates inflation
Gas and Electricity inflation
Travel costs inflation
Telecoms inflation
Food price inflation
Everything we NEED just to live inflation…
I may have missed some.
Thank you
CPI is not meaningless – but has to be viewed as what it is – a statistical mess
Your assessment is broadly in line with the markets. As an example, the oil price being over $15 higher than it was in February indicates that the market doubts on the peace holding remain.
Which exactly mirrors your last sentence which is a nice finale.
This.
A very British famine
Read. Depressing. Predictable. Will government take action? No.
I’m the treasurer of a local charity and we have our quarterly meeting tomorrow night, Richard. The charity awards financial grants to young people resident in the ecclesiastical parish boundary (it’s a very old charity) to help with educational, vocational, and sporting activities. Increasingly, we are helping with some basic items of life and the grantees are mostly not of the stereotypical “poor” background (grants are not means-tested). It’s the old folk who have all the money (I’m off to see a 91-year old widow with £58,000 a year in pension income for starters later, not that I’m making a judgemental personal comment here), whilst the younger parents and their children are finding things increasingly difficult.
Thanks. Good luck. I was involved in such an activity once. It is onerous.
I’m not sure what your policy is regarding posting links in the comments, but I’ve come across a fascinating essay by an economist, Warwick Powell, discussing economy through the lens of supply chains, showing how the classic economist view of there being any sort of natural equilibrium in an economy which it naturally settles towards is hopium. He describes economies more like a network of mutual relationships where each node seeks to reproduce itself and where disruptions or shocks(supply chain crisis/inflation) reverberate through the entire network, and how depending on any part of the network’s resilience and ability to absorb the shocks, it either survives intact, restructures itself or is rendered incapable of reproduction. It’s well worth a read… https://warwickpowell.substack.com/p/scarcity-and-shock-propagation-in
I have come across him before; interesting, but not enough to follow his substack, as I recall. But thanks