In the News
Are we reaching a turning point for inflation?
The latest data shows that US inflation is falling - with the rate for November dropping to 7.1%, from 7.7% in October. This is clearly good news - it suggests that the worst effects of the conflict in the Ukraine are working through the economy.
Whether or not it will alter the course of monetary policy is anyone's guess; most people would hope that interest rates are not going to rise as high as was once thought, although it depends upon the Federal Reserve's assessment of inflationary expectations. Of greatest interest in this regard will be the effect of this on the debt repayments of developing economies.
Like some in the UK, Robert Reich writing here is opposed to further interest rate hikes, suggesting that in going down this policy route, government have chosen a particular route, and the distributional consequences associated with it.
He sees the costs of higher interest rates as falling squarely on consumers and workers, whereas other policy measures - notably a windfall tax and tougher competition policy - could have the same effect but burden profitable companies, notably those who've unduly benefited from the energy crisis or who are able to exploit the advantages of large size, rather than some of America's most vulnerable.
Are pay rises most to blame for rising inflation?
Richard Partington states here it in no uncertain terms: UK inflation is a function of higher energy prices, and the impact of rising wages on inflation has been minimal.
As a result, he condemns the attempts of the government to create a narrative about the possibility of a wage-price spiral driven by higher wages, not least in the public sector.
For me, the most interesting data relates to the number of days lost to industrial action - look closely. The government are going to claim that the country is being held to ransom by striking railway workers and postal workers, and announce new legislation to curtail their right to strike. But the evidence - and objective evidence - suggests that, overall, there's little in the way of need for this.
The TUC take on 2022 and real wage growth: not a good year! In fact, the TUC research suggests that real wage growth has been at its slowest since 1977.