{"id":69342,"date":"2023-04-19T07:24:54","date_gmt":"2023-04-19T06:24:54","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=69342"},"modified":"2023-04-19T07:24:54","modified_gmt":"2023-04-19T06:24:54","slug":"why-is-uk-inflation-not-falling-as-fast-as-it-is-in-europe","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2023\/04\/19\/why-is-uk-inflation-not-falling-as-fast-as-it-is-in-europe\/","title":{"rendered":"Why is UK inflation not falling as fast as it is in Europe?"},"content":{"rendered":"<p>As the <a href=\"https:\/\/www.ons.gov.uk\/economy\/inflationandpriceindices\/bulletins\/consumerpriceinflation\/latest\" target=\"_blank\" rel=\"noopener noreferrer\">Office for National Statistics<\/a> has noted this morning:<\/p>\n<ul>\n<li>The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to March 2023, down from 10.4% in February.<\/li>\n<li>On a monthly basis, CPI rose by 0.8% in March 2023, compared with a rise of 1.1% in March 2022.<\/li>\n<\/ul>\n<p>That is disappointing. This small decline contrasts markedly with experience in Europe:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-69344\" src=\"https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/0B9DB91B-94FC-4FF1-92FD-DBDF16F4DD7F-550x457.jpeg\" alt=\"\" width=\"550\" height=\"457\" srcset=\"https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/0B9DB91B-94FC-4FF1-92FD-DBDF16F4DD7F-550x457.jpeg 550w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/0B9DB91B-94FC-4FF1-92FD-DBDF16F4DD7F-361x300.jpeg 361w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/0B9DB91B-94FC-4FF1-92FD-DBDF16F4DD7F-768x638.jpeg 768w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/0B9DB91B-94FC-4FF1-92FD-DBDF16F4DD7F-482x400.jpeg 482w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/0B9DB91B-94FC-4FF1-92FD-DBDF16F4DD7F.jpeg 1420w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/>Rates are tumbling in the way I would expect in France (a bit) and Germany, especially. Why aren\u2019t they here? The answer appears to be in the rigidity of our energy pricing, and Brexit (of course).<\/p>\n<p>Dealing with energy pricing first, this chart gives some indication of its significance:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-69345\" src=\"https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/6D960451-D9EF-4BD8-B78F-CF3F1F8E7026-550x348.jpeg\" alt=\"\" width=\"550\" height=\"348\" srcset=\"https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/6D960451-D9EF-4BD8-B78F-CF3F1F8E7026-550x348.jpeg 550w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/6D960451-D9EF-4BD8-B78F-CF3F1F8E7026-474x300.jpeg 474w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/6D960451-D9EF-4BD8-B78F-CF3F1F8E7026-768x487.jpeg 768w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/6D960451-D9EF-4BD8-B78F-CF3F1F8E7026-600x380.jpeg 600w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2023\/04\/6D960451-D9EF-4BD8-B78F-CF3F1F8E7026.jpeg 1468w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/>The large green band is household costs and by far the largest increase in that is energy costs. Since the rigidity is our rigged markets will not let these fall yet we will suffer higher inflation for much longer than Europe. The message is very clear: we need to change energy price regulation.<\/p>\n<p>The other large component, in blue, at the top, is food. This is not entirely down to Brexit, but if we are looking for differences with the European experience, it most definitely is.<\/p>\n<p>None of this changes my argument that inflation will tumble this year. Energy price caps are going to be much lower in the second half of the year. Inflation will fall then.<\/p>\n<p>Nothing also in this data does anything to change the argument that this inflation is all about some companies exploiting inflation for gain. It is not wages driving inflation: they are lagging far behind it. \u00a0Profits are what are keeping us worse off. Profit taking and the dogmatic refusal of our politicians to address the disaster that is Brexit are what are keeping UK inflation higher than it should be.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the Office for National Statistics has noted this morning: The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to March 2023,<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2023\/04\/19\/why-is-uk-inflation-not-falling-as-fast-as-it-is-in-europe\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,106],"tags":[],"class_list":["post-69342","post","type-post","status-publish","format-standard","hentry","category-economics","category-politics"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/69342","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=69342"}],"version-history":[{"count":2,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/69342\/revisions"}],"predecessor-version":[{"id":69346,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/69342\/revisions\/69346"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=69342"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=69342"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=69342"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}