Tuesday, 18 January 2011

Inflation, Inflation, Inflation....

The figures are out, and the news is bad (according to city and political types who know). Inflation is on the rise. The Consumer Price Index (CPI) up 0.4% to 3.7%. The Retail Price Index (RPI) up slightly to 4.8%. The Bank of England has failed to meet its inflation target of 2% for over a year, and the cries from the city for an interest rate rise to damp down demand is becoming shrill.

But Richard Murphy at Tax Research UK has a slightly different take on the detail of the figures. In his analysis much of the inflation in the system is the result of rises in indirect taxes in the last year. He points out that high interest rates are designed to hold down inflation by dampening domestic demand, and so would be ineffective against tax-induced inflation.

I'm no economist, but it's an interesting idea.


  1. Good find Braveheart!
    See what you can do when you're not just spouting the Labour line.

  2. Hanks Jim. All praise gratefully accepted, even if not sincere....

  3. I even name checked you here

    mainly because I was already getting angry about the same thing here

    But, you're right - perhaps I could have been a little more gracious!

  4. Thanks for that. No need to be TOO gracious. I don't mind a bit of ribbing...