In the current unprecedented economic circumstances, politicians and policy-makers are having to learn as they go. So are economic commentators. It was widely predicted by economists in the City and the media that the latest inflation figures would show the Retail Price Index (RPI — a broad measure of inflation) plummeting into deflation territory with prices falling by around 0.8 percent, while the Consumer Price Index (CPI — which excludes housing costs) would slump from 3 percent to closer to 2 percent, a harbinger of further falls to come.
They were wrong. The headline RPI fell only to 0 percent in February from 0.1 percent in January while the CPI rose to 3.2 percent in February from 3 percent. Even the underlying rate of RPI inflation rose to 2.5 percent from 2.4 percent. If, as a lay person, you’re baffled, you have every right to be: there’s a lot of egg on a lot of economists’ faces this morning!
Consider the bizarre position we are now in: on the one hand the RPI is zero, its lowest rating since March 1960, when Harold Macmillan was Tory PM and a young Senator called John F Kennedy was running for President.
Comments
Join the debate for just $5 for 3 months
Be part of the conversation with other Spectator readers by getting your first three months for $5.
UNLOCK ACCESS Just $5 for 3 monthsAlready a subscriber? Log in