“Inflation destroys nations and societies as surely as invading nations do. Inflation is the parent of unemployment. It is the unseen robber of those who have saved. No policy which puts
at risk the defeat of inflation – however great the short-term attraction – can be justified”.
That was Margaret Thatcher, speaking in 1980 when inflation was much higher but British politicians actually cared about it.
You won’t even hear the Governor of the Bank of England denounce today’s figures: CPI at 4.4 per cent and the traditional measure of inflation, RPI, at 5.0 per cent. It is seen as just another
statistic. The government has also chosen to announce that rail fares will be rising by 8 per cent.
George Osborne is in charge of getting inflation right. He has subcontracted the task to the Bank of England, whose ability to keep CPI at the 2 per cent target can be summed up as follows:
We use Citi’s projections at Coffee House because the official forecasts – from the Bank and the Treasury forecasting division (now the OBR) – have proved wrong so regularly.
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