The Office for National Statistics (ONS) has this morning released UK inflation figures for December 2021.
Consumer Prices Index (CPI) has hit another high at 5.4%pa in December (5.1%pa in November and 4.2%pa in October)
The ONS put the inflationary increases down to demand during the festive season and price increases in:
What about the old inflation measure of the Retail Prices Index?
The old measure of inflation which is an arithmetical mean of the average prices of a basket of household spending hit a 30 year high of 7.5%pa (up from 7.1%pa in November and 6%pa in October).
We repeat our message on RIP that we still believe that RPI is a more accurate measure as it is the costs of a standard amount of a set of goods and services divided by the number of goods and services called an arithmetical mean whereas the newer measure of inflation, CPI is a geometrical mean i.e., prices multiplied together and then the nth root of the same number of goods and services.
Bank of England
With record employment and more record job vacancies pushing wages up as well as the cost of goods and services going up, the Bank of England cannot ignore the figures and we suggest it may be soon that interest rates are increased again. We suggest it could be as much as doubling up although if that were the case moving from 0.25%pa to 0.5%pa will have little impact on slowing inflation down as many businesses have built up reserves. Higher inflation is bad long term for the economy but is fantastic for the government devaluing public sector debt before they ever have to repay it.
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