Tuesday 18 January 2011

Inflation rate

There are some useful historical figures on inflation here: Inflation

Talking of a 'whopping' 3.7 per cent inflation rise seems a bit over the top when some of us experienced annual rises of over 25 per cent. But part of the problem at the moment is that public sector salaries are frozen and they are not going up that much in the private sector.

It's also worth noting that the inflation rate looks much lower when one excludes indirect taxation. In November the CPI was 3.3 per cent, but the CPIY rate, i.e., excluding indirect taxes was 1.6 per cent, under half as much.

From government's point of view some inflation is not a bad thing as it erodes the mountain of public debt.

4 comments:

Anonymous said...

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Wyn Grant said...

Thanks for pointing this out, now sorted.

Shankar said...

Dear Wyn,

Do you think these dismal growth figures that were published a few days ago reflect a case of the economic pain being front-loaded before the economy recovers and returns to growth or something we should be concerned about?

Happy New Year

Wyn Grant said...

The figures are very disappointing, but I would not base policy on one quarter's figures. My main concern is about inflation which the Governor of the Bank has said may reach 5 per cent. In terms of growth and employment, the next 2/3 years are going to be difficult.