This is a story that can be overdone in the reporting of it, but nonetheless is of some import.The UK CPI inflation rate has dropped from March 09 to April 09 by 0.1%. Instead of 0.3%. Ho hum big deal, the rate is now just 0.1% above the Bank of Balls (that should read England, ed) target of 2%.
However RPI remains firmly in negative territory at -1.2%.
Much of the media is saying that this fall less than economists predicted is very worrying. Well yes and no. Economists tend to get everything wrong and over the past year they have been living up to this reputation spectacularly. It does not matter if things are about by 10 basis points or so.
However, inflation is being loaded into the system via printing money. Just today a very canny hedge fund (up 234% last year, no less) decided that hyperinflation was on the cards and it has started to raise funds for a new fund to make money out of this. last year they thought the banks would all fail, so I for one am not going to bet against them. They have a lot more riding on it than the say so of economists.
CPI does not look like it is going to go negative this year, or to do so only for a few weeks; so hooray for Printing money! The pain of this success is yet to come, that is for 2010 and beyond.
