Rising prices and falling real incomes
The CPI headline inflation rate has fallen to 4.8%. This BBC chart shows recent changes in the rate of increase of the general price levels using CPI and RPI indicators.
CPI annual inflation stands at 4.8 per cent in November 2011, down from 5.0 per cent in October. The largest downward pressures came from food, petrol, clothing and furniture, household equipment & maintenance. Partially offsetting these were upward pressures from increases in the cost of domestic heating and off sales of alcohol. Fuller details are on the ONS website.
Inflation erodes purchasing power of households, and savings; yet although prices have been rising, there is little evidence of surges in wage rates in UK regions, as unions press hard for wage increases to offset the rising cost of living. In real terms, households across the UK, have had falling incomes, as the rate of wage inflation remains below the level of price inflation. The North West appears to have the biggest decline in incomes.
The depreciation of sterling, rising commodity prices and strong demand in China have continued to contribute to cost pressures in the UK economy. Energy prices have risen almost 20% recently, some of the increase is due to present government policy to support greener electricity generation., a good example of conflicting macro policy goals.
The BBC video report claims that The Bank of England expects CPI to fall in the near future, citing recent falls in the price of Brent Oil Futures tp $110.However, Reuters reports that Spencer Dale the B of E Chief Economist is unsure about the case for additional Quantitative Easing measures if the rate of UK inflation remains above the target level.
blog comments powered by Disqus
Money Is Just a Set of Ideas [9 Jun 2013]
Unit 3 Micro: Business Economics Key Term Glossary [2 Jun 2013]
Chains of argument for analysis - linking inflation figures to the exchange rate [21 May 2013]
UK Economy: Has High Inflation Damaged the Economy? [21 May 2013]
Unit 2 Macro: Does High Home Ownership Cause Unemployment? [13 May 2013]
Unit 2 Macro: UK and US Growth Compared [13 Apr 2013]
Unit 2 Macro: Revision on Interest Rates [6 Apr 2013]
Unit 2 Macro: The Great Productivity Puzzle [5 Apr 2013]
Unit 4 Macro: Growth and Development in Angola [3 Apr 2013]
Unit 2 Macro: Inflation (April 2013 Update) [3 Apr 2013]
Revision Quiz: AS Economics: Inflation (1) [1 Apr 2013]
Unit 2 Macro: Revise and Test - Macro Objectives [27 Mar 2013]
CPI goods basket changes - less bubbly, more hot chocolate [13 Mar 2013]
Unit 4 Macro: The AAA Credit Rating Downgrade [23 Feb 2013]
Unit 4 Macro: Abenomics - Changing Monetary Policy in Japan [10 Feb 2013]
Unit 4 Macro: The UK Economy and the Euro [10 Feb 2013]
The New Guv’nor Hits Town [8 Feb 2013]
Teaching Macro: Charts on the US Economy [13 Jan 2013]
Unit 4 Macro: GDP and PPP Adjustments [8 Jan 2013]
Prospects for the UK Economy in 2013 [2 Jan 2013]
Unit 4 Macro: The effect of immigration on wages and prices [14 Dec 2012]
Unit 4 Macro: Indian Economic Growth is Slowing [1 Dec 2012]
Unit 4 Macro: Mo Tanweer - Debunking the Myths of China [27 Nov 2012]
Unit 4 Macro: Growth in the Emerging Economies - Can It last? [25 Nov 2012]
Unit 2 Macro: Revision Resources on Inflation and Unemployment [18 Nov 2012]
Unit 4 Macro: Wage Inflation and Chinese Competitiveness and Growth [15 Oct 2012]
A2 Development Economics Assignments [10 Oct 2012]
60 Second Adventures in Economics - The Phillips Curve [20 Sep 2012]
Unit 1 Micro: The Price of a Pizza in Brazil [8 Aug 2012]
Unit 4 Macro: Poverty Reduction Strategies in Brazil [15 Jul 2012]
Unit 4 Macro: Savings and Investment in China [14 Jul 2012]
Unit 4 Macro: Rapid Wage Inflation in China [13 Jul 2012]
End Depression Now! Paul Krugman at the LSE [30 May 2012]
Unit 2 Macro: Evaluation on Supply-Side Policies [21 May 2012]
Unit 2 Macro: Migration and the UK Economy [20 May 2012]
Unit 2 Macro: Measuring Inflation in the UK [20 May 2012]
Unit 2 Macro: Real Interest Rates [20 May 2012]
Q&A: What do we need to know about output gaps? [20 May 2012]
Unit 2 Macro: The Output Gap [20 May 2012]
Revision notes on unemployment [20 May 2012]
Unit 2 Macro: Bank Cuts UK growth Forecast for 2012 [17 May 2012]
Unit 2 Macro: Revision Notes on Supply-side Policies [10 May 2012]
Unit 2 Macro: Model answer for revision data question [9 May 2012]
Unit 3 Micro: The Dawn of a Shareholder Spring? [8 May 2012]
Unit 2 Macro: Monetary Policy and Inflation Glossary [5 May 2012]
Unit 2 Macro: Economic Cycle Glossary [5 May 2012]
Unit 2 Macro: Aggregate Demand Glossary [5 May 2012]
Macro Revision - Key Statistics on the UK Economy [4 May 2012]
Macro Revision: Putting Things in Context [29 Apr 2012]
Unit 2 Macro: Inflation and the Business Environment [6 Apr 2012]
Unit 2 Macro: Revision on Real Economic Data [2 Apr 2012]
Unit 2 Macro: Revision on Real Disposable Income [2 Apr 2012]
Posen on slower growth in the UK compared to the USA [30 Mar 2012]
Life in the Slow Lane - UK Growth in 2011 Lags the Euro Area [28 Mar 2012]
Beyond the Bike - Monetary Policy in Africa [28 Mar 2012]
Unit 4 Macro: Evaluating 3 Years of Quantitative Easing [27 Mar 2012]
Unit 4 Macro: Video Resources on the Euro Crisis [10 Mar 2012]
Unit 2 Macro: Policies to Drive Economic Recovery [9 Mar 2012]
Unit 2 Macro: Might Oil Prices Bring another Recession? [4 Mar 2012]
Economies hooked on central bank stimulants? [4 Mar 2012]
Unit 4 Macro: King on the UK Economy [15 Feb 2012]
Unit 2 Macro: Signs of Progress for Zimbabwe [29 Jan 2012]
Unit 2 Macro: Focus on China - Inflation [26 Jan 2012]
Unit 4 Macro: Focus on India - Supply Side Issues [25 Jan 2012]
Unit 4 Macro: Money, Debt and the New World Order [22 Jan 2012]
Inflation - what’s up, what’s down and what’s going to happen next [17 Jan 2012]
Unit 2 Macro: Quantitative Easing in the UK [8 Jan 2012]
Beyond the Bike - The Value of Money [19 Nov 2011]
Australia lowers interest rate to 4.5% [1 Nov 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
Unit 4 Macro: Unit Labour Costs and Inflation [12 Oct 2011]
Unit 4 Macro: UK Inflation Charts [12 Oct 2011]
University Challenged [11 Oct 2011]
Unit 4 Macro: Bank analyses the impact of QE [21 Sep 2011]
Unit 4 Macro: IMF Flags up Risks of Double Dip [20 Sep 2011]
Inflation in India [18 Sep 2011]
Unit 2 Macro: Interest Rates and Income Inequality [16 Sep 2011]
Study Note - Macroeconomic policy objectives [16 Sep 2011]
Monetary Policy Roundtable [25 Jul 2011]
Unit 4 Macro: Dangers of High Inflation [11 Jul 2011]
A2 Micro and Macro: The Economics of the Bubble [1 Jun 2011]
AS Macro Key Term: Supply-Side Policies [25 May 2011]
AQA Macro: Remember to revise inflation [25 May 2011]
AS Macro Key Term: Demand Pull Inflation [24 May 2011]
AS Macro Key Term: Deflation [24 May 2011]
AS Macro Key Term: Cost Push Inflation [24 May 2011]
AS Macro Key Term: Inflation [24 May 2011]
UK Economy Update: What Mervyn Said [11 May 2011]
Interest Rates Held at 0.5% once again [5 May 2011]
AS Micro: Rising Global Food Prices [2 May 2011]
Video Clips on the Chinese Economy [1 May 2011]
AS and A2 Macro Revision: Keynesian Economics [28 Apr 2011]
UK Economy at a Glance April 2011 [17 Apr 2011]
China set to become exporter of inflation [14 Apr 2011]
A2 Macro: Back to Roubini - a Year On! [11 Apr 2011]
AS Macro Key Term: Real Disposable Income [11 Apr 2011]
AS Macro Key Term: Monetary Policy Tightening [11 Apr 2011]
UK Minimum Wage rises by 2.5% in October 2011 [8 Apr 2011]
ECB breaks rank and raises interest rates [7 Apr 2011]
AS Macro Key Term: Fiscal Austerity [6 Apr 2011]
AS & A2 Economics Revision / Exam Coaching Workshops Coming Up:
Monday 11 March 2013 - Portsmouth (Vue, Gunwharf Quays)
Wednesday 13 March 2013 - Fulham (Vue, Fulham Broadway)
Thursday 14 March 2013 - Stratford City (Vue, Westfield)
Friday 15 March 2013 - Bristol (Vue, Cribbs Causeway)
Monday 18 March 2013 - Birmingham (Vue, Star City)
Tuesday 19 March 2013 - Manchester (Vue, Salford Quays)
Thursday 21 March 2013 - Newcastle (Odeon, Metro Centre)
Friday 22 March 2013 - Leeds (Vue, The Light)
Monday 22 April 2013 - Stratford City (Vue, Westfield)
Join over 10,000 Economics teachers who receive our regular Economics Teacher Resource Newsletter:
