UK Inflation Rate and Graphs

UK-CPI-Inflation

Current UK Inflation Rate

UK-inflation-may-2022

 

  • CPI inflation rate:  9.0% (headline rate) CPI – D7G7 at ONS
  • (page updated 19 May 2022)

Other measures of inflation

Reasons for low inflation in the UK until 2021

  • Low worldwide inflationary expectations. Europe is experiencing very low rates of inflation.
  • Fall in global inflation rates since 2007.
  • Reduced consumer spending due to Covid downturn
  • Weaker commodity price growth.

Reasons for surge in inflation during 2022

  • Rising oil prices
  • Rising gas prices
  • Ukraine war disrupting gas/energy and food supplies.
  • Lingering supply side issues from Covid lockdowns and impact on price of shipping.

Inflation trends in the UK

uk-inflation-since-1970

Despite temporary cost-push inflationary factors in 2017, underlying inflationary pressures remain muted – at least compared to the past four decades.

The current UK inflation rate compares favourably to much of the post-war period.

1970s Inflation

The 1970s frequently saw double-digit inflation. This was due

  • Cost-push factors – rapid rise in oil prices
  • Rising wages due to powerful trade unions trying to keep up with living costs.
  • Lack of independent monetary policy
  • Inflation expectations rose

Late 1980s inflation

The inflation of the late 1980s was due to

  • Rapid economic growth ‘The Lawson Boom‘ – growth was above the trend rate causing supply shortages
  • Rise in house prices fuelling wealth effect
  • Lack of independent monetary policy. The policy was partly set by ‘shadowing the D-Mark’ which led to loose monetary policy in late 1980s

Inflation and wages

  • Real wages = nominal wages – inflation.
  • Usually, during a period of economic growth – wage growth is higher than inflation, this leads to positive real wage growth.
  • During the economic recession of 2009-13 – we had a prolonged period of negative real wage growth. Wages rising at a slower rate than inflation.
  • The end of 2014 saw the first signs of renewed wage growth and positive real wage growth.

wages-inflation-mar-2022

 

Since 2008, there has been an unusual period of negative real wage inflation. (inflation higher than wage growth)

However, since the recovery from the Covid downturn, there has been a sharp increase in wages (likely to prove temporary)

See more at UK wage growth

Inflation since 1990

uk-inflation-1989-2021-

  • Inflation rose over 8% in the late 1980s due to the Lawson boom, which was a period of unsustainable economic growth.
  • Inflation was low in the period 1992 to 2007. This was a period known as the ‘great moderation’
  • The inflation of 2008 and 2012 was due to cost-push factors (devaluation and rising commodity prices)

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UK Unemployment Stats and Graphs

uk-unemployment-79-19

A selection of graphs and statistics on UK unemployment. Also, looking at factors that explain changes in UK unemployment. Why unemployment was lower in 2000s and 2010s, and how Covid-19 will cause a sharp spike in unemployment.   Raw data:  Labour market data | Source: ONS MGSX (LFS) Current UK Unemployment rate An unemployment rate …

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UK Housing Market

house-prices-nominal-1952-2020

Latest UK housing market stats and graphs. Including house prices, Price to income ratios and construction of new housing.

How to evaluate the reliability of economic data?

reliability-of-data

Readers Question: how to evaluate the reliability of economic data? This is a good question. In brief, some issues to consider Is there a political angle? – Political leanings of media/think tank In what context is the data presented? How to interpret the data. Should we look at nominal data, real data or as a …

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EU inflation and deflation

eurozone inflation

The Eurozone inflation rate is 0.4% (ECB database)  (Sept 2014) Eurozone HCIP inflation rate HCIP (Harmonized consumer index prices) Source:| (ECB Inflation graphs, sometimes a few months outdated) Food inflation Food inflation is currently negative. Food inflation tends to be one of the most volatile components. This negative food inflation is one factor reducing the …

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