Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

UK CPI Inflation Soars Above 2% Targeting a Break Above 3%

Economics / Inflation Jan 18, 2010 - 05:28 PM GMT

By: Nadeem_Walayat

Economics

Best Financial Markets Analysis ArticleUK CPI inflation is expected to bust through 2% tomorrow (Tuesday 19th) towards a target of 2.6% which was set over 3 weeks ago in the in-depth analysis and UK inflation forecast for 2010, that forecast a rise in UK inflation to above 3% early 2010, spiking as high as 3.6% and staying above 3% for most of the year only dipping to 2.7% by the end of the year as illustrated by the below graph.


Whilst the forecast for December data is at 2.6%, I would NOT be surprised if CPI inflation actually comes in at an even stronger rate of as high as 2.8% which would truly result in a shock reappraisal in the mainstream press that is still in large part lost in the midst's of an inflation / deflation debate, though I don't expect any of the permanently deluded academic economists stuck in the myth of deflation to see sense no matter how high inflation soars.

The reasons for Decembers anticipated inflation surge are:

  • Strong UK Economic Recovery underway.
  • Oil prices having trended higher to above $80
  • Impact of the 2008-2009 sterling depreciation of approx 25%.
  • Petrol price rises
  • 2.5% VAT increase back to 17.5%
  • £200 billion of Q.E. or money printing with more to come during 2010 regardless of the consensus view that it has ended.
  • Strong global economic recovery underway, with booming emerging economises (especially china) feeding the inflation fires as commodities prices soar.

Further analysis on the sustained inflation trend to above 3% is detailed in full here.

The mainstream press will tomorrow respond with many inflation shock and awe headlines to grab readers attention as a consequence of the surge in UK CPI inflation, as the mainstream press belatedly starts to awake up to the reality of the inflation mega-trend and will thus and quickly produce much copy in an attempt to explain why inflation soared during December though at least several weeks behind the curve and without any real depth of analysis to enable accurate projections to be formulated.

I also expect many of the so called "think tanks" to seek to revise forecasts for UK inflation and interest rates which only as recently a few days ago were forecasting little or no change in UK interest rates for 2010 as illustrated by earlier today's Ernst and Young ITEM Club forecast that expected no change in UK interest rates during 2010.

The immediate market reaction can be expected to be for stocks to fall and sterling to rise as both move towards discounting higher UK interest rates.

The full implications of the inflation mega-trend will follow in a FREE ebook which I am to complete within a week, to receive this in your email in box ensure you are subscribed to my always FREE newsletter. Below are forecasts for UK interest rates and economy for 2010 and 2011.

UK Interest Rates Forecast 2010

My in-depth analysis and forecast of 13th Jan 2009 forecast that UK interest rates would rise to 3% by mid 2011, and end 2010 at the target rate of 2%.

UK Economy GDP Forecast 2010

My in depth analysis and forecast as of 31st December 08 forecasts strong UK economic growth of 2.8% for 2010 and 2.3% for 2011 which follows the forecast for 2009 for GDP contraction of -4.75% as of Feb 2009.

Source : http://www.marketoracle.co.uk/Article16583.html

Your analyst generating tomorrow's headlines three weeks ago.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 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 . Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 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

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Norman
19 Jan 10, 21:36
Well done

Spot on! CPI hit 2.9%


Post Comment

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