Back to 1960!
Those expecting the first negative retail price index number in the UK since 1960, will be disappointed. The latest CPI/RPI figures from the Office of National Statistics show deflation has been successfully avoided in February. Here’s the Reuters table, where RPI comes in at a sturdy UNCH:
Analysts had been expecting February RPI figure to come in -0.2 per cent on the month and -0.8 per cent on the year. The CPI figure was seen at +0.3 per cent on the month and +2.6 per cent on the year.
So the forecasts were all over the shop.
The REAL surprise though was with the CPI figure, which unexpectedly rose to +3.2 per cent – meaning another letter of explanation to the government from Bank of England governor Mervyn King on why inflation has persisted 1 per cent above the 2 per cent target (in a supposedly deflationary environment, errr hmm).
FYI – the inflation figures come hot on the heels of the latest CPI basket rejig by the Office of National Statistics which saw rosé wine, parmesan and rotisserie chicken make it into the index and large non-free range eggs and wine boxes out, among other things. These changes would have been included in the February figure. Of course, more sophisticated non-recessionary tastes for free-range eggs, rosé wine and parmesan are unlikely to have been responsible for the whole rise in CPI.
For what it’s worth, Mervyn King seems to be as bemused as the rest of us.
Stale links:
Pay cuts and freezes spread as inflation plunges to 50-year low – The Times
Deflation returns to UK after nearly 50 years – The Guardian