Thursday, 19 July 2012

The weather improves the economy

This years weather has been appalling for many reasons, some of them tragic when I think of the couple killed in their car under a land slide!

Inflation is slowly returning to the Bank’s boundary of 2%, in the last quarter it has dropped from 2.8% to 2.4% a significant drop. Put it another way, Britain's inflation rate has halved since last September - to its lowest rate since the end of 2009.

We can not expect inflation to continue to fall quite this fast. There were quite a lot of special factors at work in the June figure, including the miserable weather, which seems to have helped to push down clothing prices by forcing shops to start their summer sales early.

Funnily enough, that is almost exactly what the Bank said would happen, in its November 2011 Inflation Report forecast - a forecast many did not dare believe, given how often - and how wildly - the Bank's recent forecasts have turned out to be wrong.

Perhaps the Bank of England has started weather forecasting?

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