Home > Inflation > Welcome Fall in Inflation Rate… as UK Aggregate Demand Slows

Welcome Fall in Inflation Rate… as UK Aggregate Demand Slows

It’s a Tuesday and it’s CPI day, so it is “never reason from a price change” time…

The Labour Shadow Treasury Minister Cathy Jamieson MP like everybody who thinks inflation is just a nasty thing which lowers real wages, bizarrely welcomed the fall in the inflation rate:

“This fall in the inflation rate is welcome, but the squeeze continues as prices are still rising much faster than wages.

Don’t worry Ms. Jamieson, Iet’s “hope” the government’s macro policy of large fiscal deficits and tight monetary policy will slow AD growth and get that inflation rate down even further, just like Ed Balls wants.  Here are are my favourite statistics, updated for April 2013:

Number of months during fiscal austerity at the ZLB in which the Bank of England has undershot its nominal target: zero

UK price level: all time high

Number of macroeconomists who think the Bank of England is impotent at the zero lower bound: absurdly high

UK CPI Level

UK CPI, CPI-CT Level. Source: ONS CPI-CT , CPI

Update: Lest anybody accuse me of being selective, an idiotic inflation hawk at HM Treasury said the same thing as Labour; “This is good news for families and businesses”.

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Categories: Inflation
    • May 21, 2013 at 16:43

      Marcus – nice post, dead right.

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