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  • Consumer price inflation, UK: April 2023

    From ons.gov.uk

    The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 7.8% in the 12 months to April 2023, down from 8.9% in March; on a monthly basis, CPIH rose by 1.2% in April 2023, compared with a rise of 2.1% in April 2022. The Consumer Prices Index (CPI) rose by 8.7% in the 12 months to April 2023, down from 10.1% in March; on a monthly basis, CPI rose by 1.2% in April 2023, compared with a rise of 2.5% in April 2022. Electricity and gas prices contributed 1.42 percentage points to the fall in annual inflation in April as last April’s rise dropped out of the annual comparison, but this component ... (full story)

For all of the BOE's tinkering and neglecting forecasting tools and models, the effect... less than a 1% reduction YoY.

BoE, should be rebranded as BTS (Back to School)
Break the cake
Its a good report. Inflation has fallen (from 10.1 to 8.7). Inflation trend is downward. It did not meet consensus (8.2).

GBPUSD can now resume its bearish trend slowly. GBPUSD trend now depends on USD.
Quoting vinta.reddy
Its a good report. Inflation has fallen (from 10.1 to 8.7). Inflation trend is downward. It did not meet consensus (8.2). GBPUSD can now resume its bearish trend slowly. GBPUSD trend now depends on USD.
Since it's a good report does that mean GBPJPY is good to buy intraday?
CPI went up 1.2% in a month when the annual target is 2%.
It had a 2.5% read drop-out data, which made the fall happen but has 13 reads at about 9% or higher.
This will be hard to change later, to reverse that steady rise like that, you need very negative reads later to hit the target (within the next year)
#doyourownanalysisordietryin
Bailey is definitely incompetent as he cannot see that the inflation in the UK is going to become entrenched due to poor deals with the EU, Brexit and importing energy/food from other countries.

He can keep raising rates all he wants, but it won't alleviate the pressure from inflation as much as he would like it to. UK needs to start looking at making deals within the EU single market otherwise we are going to see 5% inflation for the next 3 to 4 years, or BOE raising rates to the point where we will have banking crisis on steroids.
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We need back Liz Truss.
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Quoting Bones
CPI went up 1.2% in a month when the annual target is 2%. It had a 2.5% read drop-out data, which made the fall happen but has 13 reads at about 9% or higher. This will be hard to change later, to reverse that steady rise like that, you need very negative reads later to hit the target (within the next year)
Were you the one who said it'll drop around 1% and not 2%? If you are, well done! - From guest
Quoting MatTrader101
Bailey is definitely incompetent as he cannot see that the inflation in the UK is going to become entrenched due to poor deals with the EU, Brexit and importing energy/food from other countries. He can keep raising rates all he wants, but it won't alleviate the pressure from inflation as much as he would like it to. UK needs to start looking at making deals within the EU single market otherwise we are going to see 5% inflation for the next 3 to 4 years, or BOE raising rates to the point where we will have banking crisis on steroids.
The cause of inflation is money supply. If the price of a good goes up then people will spend less on other goods - that is the difference between price rises and inflation. Inflation is entrenched because money supply went over 20% for a time and half of us said what the consequences would be. Now the BoE are telling you it was Putin and Brexit - FFS - it is money supply.
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GBP/NZD moved 450 pips so far today. Holy crap..
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#doyourownanalysisordietryin
Lol..look at core cpi. It is growing =))
Economics aside and as a trader, I see from the data that the peak of inflation is behind. The trend is downwards. Its also clear that the reduction is slow and also it seems across all countries the inflation is very strictly. Hence a target of 2% for all central Banks is a far fetched target as of now.

Unlike US and partly EU, GB has a different challenge. The inflation is due to nature of food and energy costs which are different to US and EU. They have already raised rates by a good margin and inflation is higher that its counter parts. I suppose GB will have a hard landing compared to US and EU to bring inflation down.

I am expecting GBPUSD to be bearish until USD peaks out.
USD direction after FOMC meeting tonight...hawkish is buy dollar...dovish means sell dollar....until the news buy dollar
The wealthy Economies are just using their Central Bankers to patch the effect of inflation. Economics is a social science (A combination of both morals/socials/ethics and financial values) Until when the World leaders find a lasting resort to manage global issues like the unending fight btw Russia & Ukraine, Inflation will remain persistent. In the aftermath of COVID-19 here comes Inflation, Brexit and the invasion of Ukraine adds more pain. China & Taiwan is growing again. I hope inflation is not here to stay longer than anyone can imagine!!!
Quoting MatTrader101
Bailey is definitely incompetent as he cannot see that the inflation in the UK is going to become entrenched due to poor deals with the EU, Brexit and importing energy/food from other countries. He can keep raising rates all he wants, but it won't alleviate the pressure from inflation as much as he would like it to. UK needs to start looking at making deals within the EU single market otherwise we are going to see 5% inflation for the next 3 to 4 years, or BOE raising rates to the point where we will have banking crisis on steroids.
Whether Bailey is any more or less competent than any other CB, now or past, is up for debate but in context he chairs a committee. He's not a sole arbiter.
Inflation is very unlikely indeed to be controlled if interest rates remain behind the curve or less than the RoI. The best cure for inflation, unfortunately, is a recession and for people to become less sure about their futures so that they change their habits. But that's political suicide these days so any CB has a really difficult task.
The free money handouts during Covid and the War in Ukraine by the UK Government, whilst deemed necessary for the social needs of the populace, was always going to be like pouring fuel onto the fire. People didn't change their spending habits or get hurt as much as is needed to quell inflation and businesses found that they could maintain margins too. As whole industries become more and more monopolistic, the force of competition reduces.
One thing I disagree with is that you're barking up the wrong tree with the old political agenda of Brexit. RoI is a calculation based on the change in prices in one month or year, depending on the chosen axis. Brexit and the tariffs etc DID come into the calculation at some point but I hate to bring you shocking news: Brexit didn't happen in this last year or even just before it. It would be correct to say that some goods may cost more as a result of not being in the EU but that is NOT the same as the rate of change of the price of those goods.
Whether the UK was in the EU or not, its energy mix and the decisions taken by previous governments about the reserves and investment would not be any different. The UK has for a long time been importing the bulk of its food, way before Brexit, and the geography of the UK's location hasn't changed in any of our lifetimes.
Take a look at the different RoI's across the states in the EU, i.e. not the average, and you'd have to question your premise that being in the EU assures you of anything with regard to UK RoI. Those differentials across the different states show you how the MIX of the energy, food and other goods' prices are influenced by their own individual strategies, policies and investments and how much money-pumping they did, not by whether they're in the EU or not. It's the same premise for the rest of the world.
Jerome Powell said none of his 34 advisers saw inflation coming this high but most of Twitter did. What is incredible is that at this moment in time M2 is, and has been, falling. The best course would be interest rates (much earlier than it happened) and very moderate money supply expansion. But we now have quantitative tightening. IF this were to continue then the fall in inflation is going to be as 'surprising' to Jerome as it was on the way up. You can either believe the apparent confusion here or you can ask what the hell is going on? Kaplan, Clarida, Rosengren and Pelosi all made a lot of money when money expanded - that's how you make big money fast. The way you make it even faster is when you crash things super low before you hit the expand button - all the Central Bankers will say they recognise the pain of the economic slowdown etc and then they'll all sit around their hot tubs pissing themselves laughing.
Bullish on USD in general.
Quoting Sennerd
Jerome Powell said none of his 34 advisers saw inflation coming this high but most of Twitter did. What is incredible is that at this moment in time M2 is, and has been, falling. The best course would be interest rates (much earlier than it happened) and very moderate money supply expansion. But we now have quantitative tightening. IF this were to continue then the fall in inflation is going to be as 'surprising' to Jerome as it was on the way up. You can either believe the apparent confusion here or you can ask what the hell is going on? Kaplan,...
Completely agree re inflation.

But this also means that 50% of Twitter was wrong. I am not in the boat of ppl just blaming Powell for not seeing the inflation. I think the problem is much deeper than this. Problem as I see it is that central banks (not just in the US) is under a consistent political pressure steaming the markets.
'Problem as I see it is that central banks (not just in the US) is under a consistent political pressure steaming the markets.'
Something happened here almost overnight - CB's suddenly became very political with Build Back Better and the Green Agenda amongst other things.
Quoting DaJoWaBa
{quote} Whether Bailey is any more or less competent than any other CB, now or past, is up for debate but in context he chairs a committee. He's not a sole arbiter. Inflation is very unlikely indeed to be controlled if interest rates remain behind the curve or less than the RoI. The best cure for inflation, unfortunately, is a recession and for people to become less sure about their futures so that they change their habits. But that's political suicide these days so any CB has a really difficult task. The free money handouts during Covid and the...
Interest rates isn't the only tool they can use to reduce inflation... less government spending, less government lending etc. There are so many damn tools to control and reduce inflation yet everyone rolls back to interest rates as it is the nuclear option.

Also whether its ECB or FED or BOE, they have an agenda at play, they clearly understand it takes 12 months for interest rates to fully kick in and be priced into loans mortgages etc, yet they think that raising rates past terminal point is going to be the key. What they really screwed on is A)Brexit whilst trying to stay in single market and skip the EU tarrifs B) not increase the terminal rate in line or at a HIGHER pace than FED seeing how our inflation was way higher. C) Pulled assistance programmes sooner.

I am not particularly blaming Bailey, though like Powell have a big role to play in this political/economical mess.
To add to the many valid, good points already made above, I'd add a few more, global pressures.
1) The energy required to provide the future energy infrastructure is in itself creating higher demand for current energy formats. The speed at which each individual nation 'goes for it' will make a difference to the shape of their bell curves of costs (Y axis) against the X axis of time.
2) China's huge exponential expansion provided global deflation. That influence has now waned.
3) Deglobalisation, in the main due to political tensions, has increased trade friction and costs, particularly in the West.
4) Taken "in the round", the world has become increasingly socialist and in some cases the extra layer of populist (this is not a right/left/political leaning point nor whether it's the right or wrong direction to go but just a statement of fact), whether autocratically or democratically. As a result of the constant meddling in terms of regulations and political capital (irrespective of whether it's with good intentions or not), normal capital forces are not permitted to apply, which diverts natural forces ever further away from the mild deviation routes into much more wayward courses, requiring ever more meddling and the creation of moral hazard dilemmas and potential catastrophic endgames.
Quoting MatTrader101
{quote} Interest rates isn't the only tool they can use to reduce inflation... less government spending, less government lending etc. There are so many damn tools to control and reduce inflation yet everyone rolls back to interest rates as it is the nuclear option. Also whether its ECB or FED or BOE, they have an agenda at play, they clearly understand it takes 12 months for interest rates to fully kick in and be priced into loans mortgages etc, yet they think that raising rates past terminal point is going to be the key. What they really screwed...
You're clearly transfixed by Brexit. I'd urge you to try to break the gilded glasses but I suspect that's a lost cause.

We absolutely agree about Governments, the money they pump and the natural consequences. Whilst the CB's can argue against such political decisions they aren't actually in a position to make those decisions IF they are independent, as is the case in most modern social democratic states. They can only be like the goalkeeper, forced to try to make saves when the other players have messed up. They can only apply what they can after the event of the inflationary forces, whether caused by political forces or other demand/supply issues.

The only way that FIAT's would ever succeed in keeping value and quashing RoI at source would be to enforce interest rates at "RoI-plus-X%", where X is decreed in advance and known to all. It would have the same effect as the Gold Standard used to do. The issue is that no country (political masters, really) will really want to disadvantage themselves competitively, in the short term, if no other nations apply the same method.
Quoting DaJoWaBa
{quote} You're clearly transfixed by Brexit. I'd urge you to try to break the gilded glasses but I suspect that's a lost cause. We absolutely agree about Governments, the money they pump and the natural consequences. Whilst the CB's can argue against such political decisions they aren't actually in a position to make those decisions IF they are independent, as is the case in most modern social democratic states. They can only be like the goalkeeper, forced to try to make saves when the other players have messed up. They can only apply what they...
Because Brexit has a big part to play in all of this, I am clearly not insulting your intelligence but merely having a discussion with the arguments and points you present, although I do not agree with everything that you have said, I completely respect your point of view. Failing to see that Brexit had a very large impact on the UK's economy and inflation can be vice versa to your point about my 'gilded glasses'.

Fiat currencies in general are a flawed prospect, which is another topic for another day (CB's buying up gold highest in the past decade), we will move back to Gold as nominal way of using 'money' that's by the by. Fiat Currencies were created by the US as Federal backing to exchange the Fiat currency directly to gold, US realised that they will have far much buying power by completely getting rid of said exchange, and 60 years later we are where we are.

Currencies cannot be tamed as long as there is 'free printing' available to be controlled by CB's. Based on political/economical agenda's CB can bend and shape the economy as they please to a large extent (unless major global events occur) whether we like it or not.
Quoting MatTrader101
{quote} Because Brexit has a big part to play in all of this, I am clearly not insulting your intelligence but merely having a discussion with the arguments and points you present, although I do not agree with everything that you have said, I completely respect your point of view. Failing to see that Brexit had a very large impact on the UK's economy and inflation can be vice versa to your point about my 'gilded glasses'. Fiat currencies in general are a flawed prospect, which is another topic for another day (CB's buying up gold highest in the...
You have me wrong re Brexit. I agree that it will have had/has an effect but not in orders of magnitude with regard to RoI. I am NOT making any political stance on Brexit with this. I AM making a statistical point and the fact that I'd rather people sought evidential answers based on fact, rather than looking to force in an agenda. It really doesn't help focus.
Purely from a mathematical standpoint, even if Brexit contributed an on-cost of, say, 5% for round figure expediency on the WHOLE economy (which is way off reality), then your Brexit inference would contribute just 0.435% of the figure of 8.7%.
IF the Uk's CPI was only 0.435% more than the EU's then it would be fair to attribute that to Brexit. But it isn't. That's why I state you're barking up the wrong tree: there are much bigger forces at work.
The UK economy is in a state and has been for a long time. It was and is unsustainable on this path. We ought to have invested in energy infrastructure, battery technology etc and manufacturing to redirect our economy on our exit from the EU but we frizzed 500bn up against the wall straight away fighting Covid (?!). Food issues will be solved by changes in technology and the market - but no thanks at all to the government.
Quoting DaJoWaBa
{quote} You have me wrong re Brexit. I agree that it will have had/has an effect but not in orders of magnitude with regard to RoI. I am NOT making any political stance on Brexit with this. I AM making a statistical point and the fact that I'd rather people sought evidential answers based on fact, rather than looking to force in an agenda. It really doesn't help focus. Purely from a mathematical standpoint, even if Brexit contributed an on-cost of, say, 5% for round figure expediency on the WHOLE economy (which is way off reality), then your Brexit...
According to the CEPR and other private agencies, Brexit increased UK CPI inflation by 1.7 percentage points in the year following the referendum. This follows my calculation very closely of around 1.3 percentage points, with each consecutive year increasing inflation by 1.2 - 1.5%.

Which in broader terms is a massive impact to the economy as that part of inflation wasn't a reflection on UK's growth but rather diminishing buying power & rising energy/food costs due to imports and from PPI we can see that is the case too.

PPI is the true inflation, as CPI is highly manipulated by CB's/Goverments now, in the 70's CPI had a much truer value as the basket of goods that calculated CPI stayed the same, now the Goverments have the power to control this value to an extent by swapping out goods. Again discussion for another day.

Of course there are much bigger forces at work, I think Fiat currencies will disappear within the next 50 years, and gold or another precious metal will become a global currency again as it was for 1000's of years.

Time will tell with this one.
Quoting MatTrader101
{quote} According to the CEPR and other private agencies, Brexit increased UK CPI inflation by 1.7 percentage points in the year following the referendum. This follows my calculation very closely of around 1.3 percentage points, with each consecutive year increasing inflation by 1.2 - 1.5%. Which in broader terms is a massive impact to the economy as that part of inflation wasn't a reflection on UK's growth but rather diminishing buying power & rising energy/food costs due to imports and from PPI we can see that is the case too. PPI is the true...
Yes, I agree that there will have been a shock-effect in the year after the referendum, ripples during the protracted years of negotiations and then real-effect in the year of actual Brexit completion, whatever method of measure one relies upon.
However, both those events are now well-and-truly out of the statistical comparisons for RoI, whether you choose the axis to be CPI, PPI, RPI or any other. I will not accept that Brexit adds additional rates of CHANGE. It's a fixed constant of on-cost.
CHANGE is the key factor in RoI.
So this should made GBP go up...and it did for a split sec and then USD just barreled everyone for the rest of the day....
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