Problems in the UK? Blame Inflation

Inflation will remain the problem in UK for a long, long time. Inflation getting to 2% by 2025 is wishful thinking. BOE will have to raise interest rates far more than anyone expects. They should probably go beyond 8% or more. There is no getting away from recession this time, it's inevitable. When recession will become official is unknown, but it's unavoidable.

The ineptitude of the BoE's MPC is staggering. It would appear that they spend too much time pouring over defective computer models when they should be thinking or using some of their training.


1) Everything is linked to the cost of energy, so when the power bills of all UK businesses quadrupled last year who except the MPC thought that would not have a huge effect?

2) The labour market is tight, particularly lorry drivers it seems, after the Covid lock-downs and drivers who had become tired of being treated like dirt. So the inability to supply diesel and other fuels to forecourts meant that the price of that commodity leaped by 50%, and that is without the global inability to supply goods at pre-pandemic levels.

At the beginning of this year a number of farmers were simply not planting some types of crop because their main customers (supermarkets) were refusing to pay enough. It was costing more to grow the crops than the supermarkets were willing to pay.

I told my daughter that the price of food was going to double ... oh look, the price of food has almost doubled!
Give it a few more months to hit the target.

Current UK inflation is mainly due to profiteering by large conglomerates maintaining their extortionate profits and the poorest in society suffering because of it, fairer wealth distribution and donut economics will kill inflation, but there is no political will to do the right thing.

As Ive posted on another thread..
IMHO the BoE is trapped. UK inflation is twice as high as it is in the US and also above levels in the eurozone and core still rising. Three main reasons Productivity Labor market and Brexit.
Could see 5.5% from BoE in coming months which will probably push UK into recession.



Unfortunately cant disagree with you @NB -as BOE’s Chief Economist Huw Pill said: British people need to accept the country is poorer.

However you spin it, being pushed into a recession is better than being in a recession, aka Germany, so no need to push the Brexit phobia agenda. I really hope we see 5.5% rates this year as our housing market needs to be taken down a peg or two. Apparently, lack of competition is what is causing the UKs inflation to be 2-3% higher than Europe, that should get resolved through market forces in time.

out of date chart

AS SHOWN ON THAT OUT-OF-DATE CHART, the US was first out of the gate. There are a lot of lags to be thought through. It's funny people don't want to talk about the EU but the Euro Zone.
Germany is in a recession already. Maybe that's a Dynamo country slowing faster for the entire zone. The UK has never been in the Euro-Zone.
The UK May 2023 =8.7%cpi while the EU May 2023= average, 8.3%cpi. The 0.4 delta is Brexit, apparently, which highlights the desperation of the narrative.
The UK was short-sighted on storage, BUT the Germans and Italians were on course for up to 90% reliance on Russian Gas pre-invasion is beyond belief—the energy crisis is about a failed EU energy policy at its core.

Take those CPI readings with a pinch of salt, and there are all under-reported.
Sieving out the odd percentage detail from rough guesses is impossible.