Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

UK Inflation CPI Hits 3.7%, Higher than Zimbabwe, Britain Sleep Walking towards Wage Price Spiral

Economics / Inflation Jan 19, 2011 - 01:07 AM GMT

By: Nadeem_Walayat

Economics

Best Financial Markets Analysis ArticleUK Inflation for December 2010 soared to CPI 3.7% from 3.3% which is set against academic economist expectations of just a few hours earlier of 3.3%. This now puts UK inflation Higher than that of hyperinflation prone Zimbabwe's CPI at 3.2%, thus making a mockery of long standing commentary in the press that it was ridiculous to compare Britain's inflation problems with that of Zimbabwe.


Meanwhile the more recognised measure of Inflation RPI stood at 4.8% and real inflation at 6.46%, as the official inflation indices have been systematically doctored to under report real inflation by successive governments.

The Bank of England MPC members continue with the mantra of temporarily high inflation due to short term factors. One could cut and paste from any inflation statements from MPC members of the past 12 months to hear the same propaganda out of the Bank of England. The question everyone should be asking the BoE is when does temporary high inflation stop being temporary? Originally it was for a couple of months, now it is a year, will high inflation still be temporary a decade from now? For that is how long I expect the Inflation Mega-trend to run.

The gold fish memory broadcast and mainstream media fed by ivory tower academic economists continues to tow the line of temporarily high inflation by focusing on core inflation that excludes, food and energy costs because off course everyone in the UK has stopped feeding or heating themselves, with some even blaming the inflation rise on VAT despite the fact that the VAT hike did not kick in until the 4th of Jan 2011.

UK Inflation Forecast 2011

The updated in depth analysis and forecast for UK inflation for 2011 (17 Jan 2011 - UK Inflation Forecast 2011, Imminent Spike to Above CPI 4%, RPI 6% ) concluded in UK inflation spiking higher to above 4% on release of January 2011 (Mid Feb 2011), and thereafter trend lower towards 3% by the end of 2011 and therefore remaining above the Bank of England's 3% upper limit for the whole of 2011. The Bank of England's most recent Inflation Report forecast UK CPI of 1.7% by the end of 2011, however the BoE had forecast UK CPI of just 1% by the end of 2010 (Feb 2010), which is inline with the Bank of England's permanent mantra of near always imminent deflation so as to better manage the populations inflation expectations in their favour.

UK Inflation of CPI 3.7% is precisely inline with the forecast trend, that should see the UK inflation rate soar to at least 4.2% on release of January data next month.

Bank of England Targeting Nominal GDP Not Inflation.

My ongoing UK Inflation analysis has concluded in the fact that the Bank of England has clearly not been targeting 2% inflation for some time but more likely been targeting a sustained trend to above 2% GDP. Inflation is a tool to achieve this as high real inflation allows the Bank of England to pump out economic growth propaganda to give the illusion of nominal growth when in real-terms the economy is stagnating.

The Inflation Mega-trend

We are living in a decade of high inflation that was covered at length in the 100 page Inflation Mega-trend ebook (FREE DOWNLOAD), that contains 50 pages of analysis and 50 pages of wealth protection strategies.

Western governments such as the UK and USA are printing their way out of their fiscal crisis whilst emerging markets have soaring demand for commodities, goods and services and are now seeking to export their inflation abroad so as to prevent their populations from revolting over high food prices Tunisia style.

The bottom line is that the Bank of England remains paralysed by the fear of another Banking Sector Armageddon, and is continually pressured by the UK government that seeks high inflation as a means of making stealth deep real terms cuts in spending, the deficit and total accumulated debt, thus the British economy is being sleep walked towards a wage price inflation spiral, as people refuse to be lied to anymore on temporary inflation statements and start to demand wage rises in line with inflation, at which point the BoE will again act too little too late.

The British Pound soared against the Dollar on the news that caught many market participants off guard who had been expecting the opposite to transpire. My last in-depth analysis on sterling forecast a volatile trend towards a target of £/$ 1.85 by Mid 2011 as illustrated by the below graph (04 Oct 2010 - British Pound Sterling GBP Currency Trend Forecast into Mid 2011 ) .

My next analysis will seek to come to a trend conclusion for UK interest rates in light of another year of high above target inflation and try to answer the question will interest rates rise during 2011 and if so when and by how much.

Ensure you are subscribed to my always free newsletter to get this analysis and forecast in your email in box as well as my next ebook on the Real Secrets of Successful Trading which will also be made available for free (Anticipated March 2011).

Source and Comments: http://www.marketoracle.co.uk/Article25686.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-11 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 24 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Martin
19 Jan 11, 13:33
UK Housing

Nadeem,

i've been reading your articles for years now, many thanks for all the hugely informative information. I take a great deal of interest in the economy as a whole, but none more so than the UK housing market, as my family and I are currently priced out. Will your UK housing forecast ebook be available any time soon?

Again, many thanks for all your work.

Regards


Nadeem_Walayat
19 Jan 11, 14:21
UK house prices

Hi

I have been wanting to write an ebook on the uk housing market for nearly a year, but I just do not have the time.

It would contain time critical information so would need to be written and published within 3 months, which means little time for anything else.

I will be performing analysis on UK house prices over the coming months, but it may not resolve into a ebook.

But I will be writing an ebook on the real secrets of successful trading and investing which will be much easier to do as it will not contain any time critical information.

Best

NW


Diane
20 Jan 11, 13:05
DOW from Janaury 2011

Hello Nadeem,

I always read your posts with interest.

I have been waiting for your promised mid January up-date on the DOW. Any sign of it on the horizon?

Many thanks and best wishes,

Diane :)


Nadeem_Walayat
20 Jan 11, 14:55
Dow

Hi

My current focus is on UK interest rates, but I'll do a quick update on the dow this weekend.

NW


Realinvestor
21 Jan 11, 06:35
Commodities

CPI going up as shown above is it fare to assume that Gold and Silver will go up


DDC
22 Jan 11, 16:55
Dow update

Hello Nadeem,

Just wanted to say how much i like reading your articles.

Can't wait to read your next update on the DOW!

Thanks for all the great work!

DDC


Mike Burns
23 Jan 11, 16:24
love your work

First of all i love your your work . You have made some great calls. Any idea about China ? Hyper inflation maybe ? Could they stall out their growth because they need to tighten and that would effect the world


jonnysingapore
01 Feb 11, 08:31
wage spike?

Hi Nadeem. Great writing as always.

Can you infact see a wage spike in our future with poor employment prospects?

That would appear to be highly significant for interest rates and any asset price falls.

Privileged industries (eg south east) and senior management will enjoy wage rises but it isnt clear where a wage spike can happen and hence it isnt clear where interest rates will rise significantly.


Nadeem_Walayat
01 Feb 11, 08:33
Wage Spike

Hi

I am working on the interest rate forecast that will be going out in a few days which includes the wage price spiral threat.

NW


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules