The most radical aspect of the new Office of Budgetary Responsibility is not that an ‘independent’ agency is now producing forecasts but that the government body is risking predicting house prices. And it confidently says house prices will keep rising.
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Disposable cameras are ejected from the government’s inflation calculations and cereal bars inserted: it may reflect our changing lives but it distorts the statistics. The 2010 retail prices index cannot properly be compared with the previous year’s if the components keep changing.
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Supermarkets are probably the most competitive business in the UK. Why then are they being lumbered with an ombudsman, a new supplier code and all the compliance bureaucracy that goes with them?
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The period of falling prices and low inflation was novel but all good things come to an end: from now on it looks like business as normal as prices rise again. And why would any government or central bank want otherwise?
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The first indication that post-crisis regime of low interest rates is ending has emerged – on the opposite side of the world. Australia’s quarter per cent rise will gradually trigger increases across the rest of the globe.
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This is an old-style financial crisis but not all the old answers will work. Freezing the pay of doctors and judges may have worked for the Wilson and Heath governments but it has little impact when inflation is negligible or negative.
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Hurry hurry while stocks last? Companies that want to issue bonds because they cannot borrow may find the government has got there first.
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Deflation is not a good thing, but while Britain has it, business should exploit it. And it’s going to go lower.
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Two-thirds of businesses claim they will cut or freeze wages. I’ll believe it when I see it, but such threats are the perfect lever for freezing public pay immediately.
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After all those years fighting inflation the government finds itself criticised for abolishing price rises! True, the government is criticised for everything now, but this is a problem for later, not the present.
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