Tuesday, March 24, 2009


You are not alone. Here are a few quotes following the surprise increase in the UK inflation rate.

Yes, it is deflation

"UK economy teeters on brink of deflation."

Grainne Gilmore, Times journalist.

Oh no its not

"Surprise rise in inflation defies City predictions."

Julia Kollewe, Guardian journalist

Inflation? That does not compute.

"It is surprising to see CPI inflation increasing when a sharp fall was widely expected."

Hetal Mehta, senior economic advisor to the Ernst & Young Item Club

Just wait, we will have deflation in a few months.

"It’s a big surprise. We see inflation dropping really quite sharply in next few months and this data is a hiccup along the way,"

Stewart Robertson, an economist at Aviva Investors

Deflation; we are nearly there

"RPI inflation is stubbornly avoiding going into negative territory, but we think it's only a matter of time before it does."

Philip Shaw, chief economist at Investec,

It is the fall in Sterling that is screwing up the deflation story

"This (the increase in food and fuel inflation) could suggest that the fall in sterling is working its way through to the high street,"

Vicky Redwood, UK economist at Capital Economics

Actually, we expected inflation but we didn't think it would happen this quickly.

"With a 28% fall in the exchange rate over 18 months, we clearly expected a good part of that to feed through to the domestic price level. What was unclear was precisely how much and at what speed it would come through."

Mervyn King, Governor of the Bank of England

The Bank of England still cares about inflation, even though it missed the target for three straight years.

"What will keep our feet to the fire is the inflation target — that’s why we have one."

Mervyn King, Governor of the Bank of England

Another fiscal stimulus? Don't even think about it Gordon

"The fiscal position in the UK is not one that would say 'Well, why don’t we just engage in another significant round of fiscal expansion."

Mervyn King, Governor of the Bank of England


  1. It does not require an MBA from University of London or Yale to know that if the government and/or central bank prints money like the US and UK governments and central banks are now printing money, you create inflation.

    Just ask any Argentinian over the age of thirty. Better yet, ask any current resident of Zimbabwe.

    Ask them about the benefits of massive governmental intervention, and the joys of 'quantitative easing'.

    I just wish there were those left alive from the Weimar Republic who could recount first-hand the disastrous results(on all levels) of such folly.

    Seems Brown, Obama, Geithner et al slept through history class when the topic was covered.

    Or more tragically, they were told, "It can never happen again. You dear ones are the best and brightest, and just not capable of failing like that. Now, run along, you'll miss your reservations at the tennis court, boys...."

  2. The arrogance and deviousness of Brown is epic. He, I am sure, believes the economy will be fine and bounce back like a Tokyo Hurujuku girl on ecstasy. But instead, what we will have is hyperinflation. I am already getting tired of the beggars on the streets of London and on the Tube. Doesn't Brown realise that shit got old back in the 80s?

  3. Not confused.

    This is the start of intense stagflation.

    Inflation in food/energy/imports due to weak pound.

    Deflation of previously overinflated housing.

    I think the UK is about to go through what the US went through during 2008.