Official CPI @ 0.4% ?24 Mar 2021 15:05
With official CPI at just 0.4% in the UK, inflation seems to be everywhere you look except in government statistics. But it’s only a matter of time before it appears there, too, says Dominic Frisby.
We learned this morning that the annual UK inflation rate was 0.4% in February – or, at least, so the Office for National Statistics would have you believe.
In the US, meanwhile, it is 1.7%. Who believes this stuff?
Today we talk inflation.
Inflation is everywhere, except where we measure it!
I was having some fun on Twitter yesterday, like so many of us, wasting time that could have been better spent on productive endeavour, posting examples of how there is “no inflation”.
These were all news headlines from just the past few days. Steel prices have more than trebled this year. House prices in the southwest rose by 17% last year, while the first-time buyer in London now needs a deposit of £132,685. “The era of dirt cheap flights is ending,” says CNBC, while British Airways is raising prices for frequent-flyer tickets.
“Food prices are soaring faster than inflation and incomes,” reports Bloomberg. In the UK they have risen by 8.3% since January, says an index compiled for the BBC, while meat and fish are up by 22.3%. Note that this is a global phenomenon with some nations now looking at price caps.
With soaring metals prices, in particular the prices of palladium and rhodium, catalytic converter thefts are on the rise again. There’s a whole account on Twitter dedicated to posting CCTV footage of catalytic converter thieves in action.
Dog theft is on the rise too, by the way, because puppy prices have sky-rocketed. I bought Frodo, my miniature poodle, for £500 ten years ago. Today he would cost me £4,000.
Base metals prices, notably copper, iron, tin and nickel are at multi-year highs. Commodity prices are 68% higher than last year, says the Engineering Record. Wheat, corn, oats, cotton, sugar, soybeans, palm oil – it’s hard to find a grain or soft commodity that isn’t in a runaway bull market. Crude oil went to three-year highs last week (it has since pulled back – more on that in a moment).
There is inflation in financial assets too. Stockmarkets, especially in the US, continue rising. As for gilts and bonds – oof! Say I wanted to secure an annual yield of £50,000. About 12 or 15 years ago, it would have cost me a million quid. Now it costs me ten times that (I’m using round numbers).
Is anything undervalued anymore?
“Start taking profits on this bull market,” a wiser head than me advised on one of the Signal chat groups I find myself in.
“Which bull market?” I asked. “There are so many.”
“Good point. The dodgy one,” came the reply. I don’t know which one is the dodgy one. Is it tech? Is it bitcoin? Is it commodities? Is it government bonds? They are all riding the tide of funny money.
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