Tag Archives: CPI inflation

UK inflation just hit a four-year low. Hurrah! The Bank of England will now be under much less pressure to raise interest rates – which is good news for the UK’s highly indebted households.

Inflation is now so subdued we don’t need to worry about it anymore. The real danger is that Britain contracts a nasty dose of deflation – the Japanese-style disease of falling prices, stalled demand in expectation of a further price slide and curtailed investment. So be reassured that our central bank, having already created £375bn of virtual money, could yet unleash even more quantitative easing.

The above two paragraphs represent, more or less, the conventional wisdom on UK inflation. I find myself, yet again, disagreeing with almost every word – except for the very first sentence. UK inflation is indeed at a four-year low, according to the Office for National Statistics. In November, the Consumer Price Index was 2.1pc higher than the same month in 2012.

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