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janna333

janna333 wrote a comment in the Miss Dukascopy Contest

Last summer/autumn I was very critical of the methodology used in this measure which is called CPIH. If you look at today’s numbers you can see why.
Victoria_Crowmberg

Victoria_Crowmberg created a blog post

oday sees the publication of the UK inflation figures for April which are likely to show for the first time in a while a fall in the rate of annual inflation. However whilst this dip is welcome it will remain over target which will make it some 41 months in a row that this has been the case. To show the significance of this in relation to UK economic policy making I would like to take you back to the Bank of England Inflation Report of May 2009 which told us this.

Inflation is likely to fall back sharply over the next few months…..inflation is more likely to be below the target than above it for most of the forecast period.

Okay why was that?

the margin of spare capacity that is likely to persist over the forecast period pushes down on CPI inflation

This margin of spare capacity or what is called the output gap never did push down on UK inflation did it? Never mind some still think that it doing so is just around the corner.

This policy error led the Bank of England to keep expanding a programme designed to increase the rate of inflation.

to increase the programme of asset purchases to £125 billion in total

It is of course treble that size now.

Back then an excellent question was asked by Sam Fleming

Could I ask you – the recovery and growth in 2010 gets us towards about 3% growth, looking at the Fan Chart. Could you explain why it is that, given that sharp recovery – or apparently sharp recovery – you expect inflation to remain so low,

So as we are reminded that …

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