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Prof Huw Dixon

Posted: 20 October, 2021 - 13:18

CPI Inflation fell to 3.1% from the previous months 3.2%.  Inflation was expected to fall as there was a “base effect” of -0.4% as the increase in inflation in August-September 2020 dropped out (this spike of 0.4% was partly due to the rebound from the Eat Out to Help Out and VAT cut in August 2020).  However, in addition to this base effect, there was a significant element of new inflation, with prices rising by 0.3% between September and August. This followed from a very sharp rise of 0.7% in July-August.

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Prof Huw Dixon

Posted: 15 September, 2021 - 11:41

CPI inflation rose by a large amount (1.2%) and is now at 3.2%.  Part of this increase was due to the “base effect” of the 0.4% fall in inflation last year (July-August 2020) dropping out of annual inflation. The fall in July-August 2020 reflected the Eat out to Help out Scheme and the reduction in VAT for the hospitality sector. However, in addition to this was a very large element of new inflation, with prices rising by 0.7% between July and August.

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Prof Huw Dixon

Posted: 18 August, 2021 - 11:44

CPI inflation fell by a large amount (0.5%) and is now at 2.0%.  All of this effect was due to the “base effect” of the spike in inflation last year (June-July 2020) dropping out. There was no new inflation in June-July 2021 as the general level of prices remained constant. The reduction in inflation was spread across most sectors, the only exception being Transport, which showed a large month on month increase, largely due to motor fuels and second- hand car prices. Clothing and footwear also showed a significant decrease due to the July sales.

Looking forward, when we allow for the reversal of VAT reductions in the hospitality sector and scheduled rise in household energy prices announced by OFGEM, we expect inflation to increase rapidly in the later months of 2021 reaching a peak of 3.9% or higher in the first quarter of 2022, falling to about 3% by July 2022.

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Prof Huw Dixon

Posted: 14 July, 2021 - 14:59

Although the origins of national income accounting date back centuries, these concepts were taken up by the British government as a vital part of the war effort when the Central Statistical Office was founded in January 1941 directly from Winston Churchill’s command. The crisis of war drove innovation in the field of economic statistics, creating the need for accurate and useful economic statistics.

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Prof Huw Dixon

Posted: 14 July, 2021 - 10:33

CPI inflation rose by a large amount (0.5%) for the third month running and is now at 2.5%. The contributions to inflation were spread across most types of expenditure, with Transport being the largest. The current high levels of monthly inflation are unlikely to be sustained and are due to recovery of some prices in the first lockdown and short-run adjustment and supply-chain issues. Inflation will continue to increase until it peaks in early 2022 and then comes down again.  The peak may be above 3% but is unlikely to exceed 4%. The high level of inflation in the US is driven by very different factors to UK inflation and we do not expect UK inflation to “catch up” with the high levels of US inflation.

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Prof Huw Dixon

Posted: 17 June, 2021 - 17:21

CPI inflation rose by a large amount (0.6%) for the second month running and is now at 2.1%. The main drivers of the increase from April were Clothing and footwear and Recreation and Culture. Women’s clothing showed some very large increases. The current high levels of monthly inflation are unlikely to be sustained and are due to recovery of some prices from low levels in the first lockdown and short-run adjustment and supply-chain issues. Inflation will continue to increase until it peaks in early 2022 and then comes down again.  The peak may be above 3% but is unlikely to exceed 4%. The high level of inflation in the US is driven by very different factors to UK inflation and we do not expect UK inflation to “catch up” with the high levels of US inflation

 

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Prof Huw Dixon

Posted: 19 May, 2021 - 14:41

CPILW rose significantly to 1.5% in April from 0.8% in March. The official CPIH measure of inflation also rose significantly to 1.6%  from 1.0% the previous month.  The gap between the official measure and the measure using lockdown weights has remained small but positive.  This contrasts with the months prior to December 2020, when CPIH was less than CPILW, indicating that the official measure tended to understate inflation in that period. Since December 2020 the two measures have moved closely together indicating that the official measure CPIH is robust to any expenditure shifts resulting from the Pandemic.

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Prof Huw Dixon

Posted: 21 April, 2021 - 11:45

Summary

CPILW fell to 0.8% in March from 0.9% in February. The official CPIH measure of inflation rose significantly to 1%  from 0.7% the previous month.  The increase in inflation captured by CPIH may therefore be misleading, as it puts too large a weight on those sectors driving the increase.

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Prof Huw Dixon

Posted: 24 March, 2021 - 12:29

Summary

The CPILW inflation remained at 0.9% for February, unchanged from January. The CPIH measure of inflation fell slightly from 0.9% in January to 0.7% in February. Whilst the headline CPILW inflation was constant to the first decimal place, to two decimal places there was also a slight decrease from 0.91% to 0.86%.

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Prof Huw Dixon

Posted: 17 February, 2021 - 12:45

The CPILW rose slightly from 0.8% in December to 0.9% in January.  The CPIH measure of inflation also increased from 0.8% in November 2020 to 0.9% in December. Both measures indicate a slight increase in inflation in January. 

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Prof Huw Dixon

Posted: 20 January, 2021 - 11:31

This blog is written by NIESR Fellow Huw Dixon. Any opinions expressed in the paper are those of the author, and do not necessarily reflect the views of the Institute

 

Summary

The CPILW rose slightly from 0.7% in November to 0.8% in December.  The CPIH measure of inflation also increased from 0.6% in November 2020 to 0.8% in December. Both measures indicate an increase in inflation in December.

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Prof Huw Dixon

Posted: 16 December, 2020 - 11:42

This blog is written by NIESR Fellow Huw Dixon. Any opinions expressed in the paper are those of the author, and do not necessarily reflect the views of the Institute

 

Summary

The CPILW fell slightly from 0.9% in October to 0.7% in November.  The CPIH measure of inflation also decreased from 0.9% in October 2020 to 0.6% in November. Both measures indicate a fall in inflation in November.

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Prof Huw Dixon

Posted: 26 October, 2020 - 07:49

This blog is written by NIESR Fellow Huw Dixon. Any opinions expressed in the paper are those of the author, and do not necessarily reflect the views of the Institute

 

 

Summary

The CPIH measure of inflation has increased to 0.7% in September 2020, from its August level of 0.5%. The CPILW decreased slightly to 0.9% from the August value of 1.0%.

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Prof Huw Dixon

Posted: 16 September, 2020 - 14:18

This blog is written by NIESR Fellow Huw Dixon. Any opinions expressed in the paper are those of the author, and do not necessarily reflect the views of the Institute

 

Summary

The CPIH measure of inflation has decreased to 0.5% in August 2020, from its July level of 1.1%. The CPILW fell by less, with an August value of 1.0% down from the previous month 1.2%. 

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Prof Huw Dixon

Posted: 19 August, 2020 - 12:09

The CPIH measure of inflation has increased to 1.1% and now the gap between the lockdown measure CPILW of 1.2% is small. The use of pre-pandemic expenditure weights is no longer leading to an under-estimate of inflation.

Inflation is set to increase as the pandemic raises costs in many parts of the economy.  This is unlikely to happen in 2020 as demand will remain low as unemployment and bankruptcies increase in the coming months. 

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Prof Huw Dixon

Posted: 15 July, 2020 - 11:58

The CPILW for June 2020 is 1.1%, unchanged from 1.1% in May. This is 0.3% above the official CPIH of 0.8% and indicates that the official inflation measure CPIH understates inflation.

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Prof Huw Dixon

Posted: 17 June, 2020 - 15:31

The CPILW for May 2020 is 1.1%, a slight fall from 1.2% in April. It is 0.4% above the official CPIH and indicates that the official inflation measure CPIH understates inflation.

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Prof Huw Dixon

Posted: 8 May, 2020 - 15:28

The ONS intends to alter the way it computes the CPIH index in response to the CV19 Lockdown and social distancing (ONS 2020).  Partly this has to do with the collection of prices: partly with the calculation itself.  Indeed in yesterday’s published minutes of the MPC, the problems of the scope of collection and the availability of certain price series was highlighted