Can we stop talking about inflation now?
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
Painful increases in the price of food, energy and many other goods have featured heavily in the news agenda and the minds of households and businesses for the last two years. But new figures from the Office for National Statistics suggest that the worst is over.
Inflation fell sharply in the UK in October, according to the ONS. The consumer price index, the main measure of inflation, rose by 4.6 per cent year-on-year last month. This is down from 6.7 per cent in September and well below the peak of 11.1 per cent it hit last October. The reading is also lower than the 4.8 per cent that economists had forecast, according to a consensus compiled by Reuters.
The graph below from the ONS shows how inflation has moved in the UK over the last decade. The light-blue line is CPI while the dark-blue line is CPI combined with housing costs (such as monthly mortgage payments). The black line is housing costs only.
Despite the drop in inflation overall it is worth noting that food prices are still up by 10.1 per cent year-on-year. The fall in inflation was driven by a 16 per cent drop in energy prices compared to last year. The table below shows how prices have changed year-on-year for a range of goods and services…
The pound has fallen against the dollar on the back of the inflation data. This is because traders are betting that the easing of inflation makes it more likely that the Bank of England will hold interest rates at 5.25 per cent at their next rate-setting meeting in December. In fact, some economists have suggested that the Bank could start to cut interest rates as soon as next May. Nonetheless, inflation is currently still well above the Bank’s target of 2 per cent.
Sterling is down 0.2 per cent against the dollar today at $1.247. However, it is still up 5 per cent over the last year, as the graph below shows…
The new figures confirm that the government has hit its pledge to halve inflation this year. You can see some of the reaction on social media to the new figures below…
Other stories that matter…
1. Manchester City has posted annual revenues of £713 million, the biggest ever for a Premier League club. Revenues were boosted by a rise in broadcast income thanks to the football club’s run to the Champions League final. You can read more in a Guardian story here and see the full results here
2. The Economist has picked its ten global trends to watch in 2024. The list features elections in the US and UK, tension over Taiwan, businesses putting new AI technology to use and a growing battle for lithium, copper, and nickel. You can find the list here
3. Following Suella Braverman’s ferocious letter to Rishi Sunak following her sacking, John Authers at Bloomberg has unearthed a rather different resignation letter from Estelle Morris to Tony Blair in 2002 in which the-then education secretary is brutally honest about her own shortcomings. Morris wrote: “I've learned what I'm good at and also what I'm less good at. I'm good at dealing with the issues and in communicating to the teaching profession. I am less good at strategic management of a huge department and I am not good at dealing with the modern media. All this has meant that with some of the recent situations I have been involved in, I have not felt I have been as effective as I should be, or as effective as you need me to be.” You can read that letter in full here and find John Authers’ excellent Points of Return newsletter here
4. Warner Bros says the Barbie movie contributed more than £80 million to the UK the economy. The movie was filmed at the company’s studios in Leavesden, Hertfordshire. BBC story here
5. A new book called The Geek Way looks at how the success of the Silicon Valley tech giants has encouraged companies around the world to try a new approach to management. This includes working at speed, giving more personal autonomy to staff, using science and data to make decisions, and being open about success and failures. You read more in a piece by Harvard Business Review here
And finally…
I am going to hand-over to the FT Magazine for today’s recommendation because it has asked its writers across the country to suggest 19 cosy winter restaurants in the UK. The list is great and includes the Blacksmith Arms in Broughton Mills, Cumbria, Crabshakk in Glasgow, Arbequina in Oxford, The Black Swan/Dirty Duck in Stratford-upon-Avon and the Walcot in Bath, Somerset. You can find the list here
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Best
Graham