Reader’s Question: Please can you help me to find a long term RPI forecast for the next 25 years.
Firstly, I can’t resist a few economics ‘jokes’
- “An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today. “
- “The First Law of Economists: For every economist, there exists an equal and opposite economist.”
- The Second Law of Economists: They’re both wrong.
- Q:Why did God create economists ?A:In order to make weather forecasters look good.
To be honest, it is difficult to make inflation forecasts for more than 12 months time. Personally, I feel that inflation forecasts for 25 years hence are mere random speculation. It is very difficult to have any certainty about inflation and future economic situations that far in the future. This is probably why a google search doesn’t reveal anything meaningful
Long Range Inflation Forecasts may try to take these issues into account.
- Are we entering a new era of macro economic stability, where central banks have finally mastered the art of managing the economy? The medium term prospects for greater economic stability are quite promising in this regard. People are already suggesting that the boom and bust economic cycle are a thing of the past in the UK
- Will a shortage of Raw materials cause cost push inflation? or will alternatives be found?
- To what extent will new technology continue to lower costs?
- Will Global warming cause shortage of food and water, therefore pushing up prices of basic necessities?
- Will overpopulation cause demand to rise faster than supply
This is probably not what you wanted to hear. But, for example, the Bank of England will only publish inflation reports for up to 3 years in the future. Bank of England – inflation
The Bank of England also publish inflation forecasts as an inflation fan. This means that over time there is a greater likelyhood of their forecasts being wrong and diverging from their predictions.
Unfortunately searching on google, I was also unable to find any meaningful long range inflation forecasts. So I will give the very unofficial Economics Help inflation forecasts for the next 25 years.
- 2010 Inflation 3%
- 2020 Inflation 5%
- 2025 inflation 5%
(like all good economists I am just rolling a dice here 
)
thanks for the interesting question though
5 comments ↓
I feel better now
I just graduated in Economics and people stared to call me an Economist and ask for advises, like I can predict the future or something!! I was starting to freak out but I feel better after reading this…
Yes, and good economists will never forget they are fallible.
and better still new economists should know how to spell advice…
I couldn’t help but chuckle (reading in 2009), that sentence.
“People are already suggesting that the boom and bust economic cycle are a thing of the past in the UK.”
*chuckle* Thanks for the article though!
I’m starting to think that it may be a good idea politically to try and push UK inflation up to about 8% as the time lag in salaries and unemployment should allow employers to restrain pay demands and it’ll cheapen UK national debt. Hmm… now if only there was any evidence to back it up!
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