UK Inflation is hitting the poorest hardest

As we advance on a raft of UK inflation data there has already been a reminder of one of the themes of this website which is that the UK is an “inflation nation” where the institutional bias is invariably one way. From the BBC.

Drivers saw their car insurance premiums rise by an average of £110 in the last year, a comparison site says.

More expensive repairs and recent government changes to injury payouts pushed up annual insurance costs by 16%, according to Confused.com.

It found drivers paid on average £781 on comparison sites for a comprehensive policy in the year to March 2017.

Average premiums are set to rise to a record high and could pass £1,000 next year, it added.

Up,up and away! I guess those pushing for driverless cars will be happy with this but few others. Some of this is that cars are more complex and thereby more expensive to repair but little or nothing was done about the rise in “whiplash” claims and there has been something of a stealth tax campaign.

IPT went up from 6% to 9.5% in 2015, to 10% in 2016, and will rise to 12% in June 2017. ( IPT = Insurance Premium Tax)

Inflation outlook

We get much of this from commodity prices and in particular the price of crude oil. If we start with crude oil it has returned to where it has mostly been for the last few months which is around US $55/6 for a barrel of Brent Crude Oil where the OPEC production cuts seem to be met by the shale oil producers. However today’s data will be based on March where the oil price was around US $5 lower so this is for next month.

Speaking of the price of oil and noting yesterday’s topic of a rigged price ( Libor) there was this on Twitter.

In 2 years oil price/bbl gyrated from $80->$147->$35->$80 while physical demand for consumption varied by less than 3%……..I recommended to Treasury Select Committee in July 2008 a transatlantic commission of inquiry into the completely manipulated Brent market…..I blew the whistle on LIBOR-type oil futures market manipulation in 2000 & lost everything I had. Treasury/FSA were complicit in a whitewash

I have speculated before about banks manipulating the oil price but how about the oil price rise exacerbating the initial credit crunch effect?

One area of interest to chocoholics in particular is cocoa prices as I pointed out last week. If we look at them in detail we see that London Cocoa has fallen from 2546 last July to 1579 with 2% of that fall coming this morning. How many chocolate producers have raised prices claiming increasing costs over the past few months? Even allowing for a lower UK Pound £ costs have plainly fallen here as we wait to see if Toblerone will give us a triangle back! Or will we discover that the road is rather one-way……

We get little of a signal from Dr. Copper who has been mostly stable but Iron Ore prices have moved downwards. From Bloomberg.

Iron ore dropped into bear-market territory, with Barclays analysts pinning the blame on lower demand from China……Ore with 62 percent content in Qingdao fell 1 percent to $74.71 a dry ton on Monday, according to Metal Bulletin Ltd., following a 6.8 percent drop on Friday.

So as we wait to see what the price of crude oil does next some of the other pressure for higher inflation has abated for now. This was picked up on the forward radar for the official UK data today.

Input prices for producers increased at a slower rate in the 12 months to March compared to the beginning of 2017………PPI input price increased by 17.9% in 12 months to March 2017, down from 19.4% in February, as prices remained fairly flat on the month and prices increased in the previous year.

There was also a slight fading of output price inflation.

Factory gate prices (output prices) rose 3.6% on the year to March 2017, from 3.7% in February 2017, which is the ninth consecutive period of annual price growth.

Our official statisticians point us to higher food prices which has been a broad trend.

In the 12 months to February 2017, vegetable prices in the EU 28 countries increased by 12.4% and in Germany they increased by 22.5%.

However whilst this was true this may well be fading a little as well. We had the issues with broccoli from Spain earlier this year but more recently I note there are cheaper prices for strawberries from er Spain. So whilst there was an impact from the lower Pound £ we wait to see the next move.

CPIH 

This is the new headline measure of inflation for the UK although those who remember the official attacks on the Retail Price Index for being “not a National Statistic” will wonder how a measure which isn’t one either got promoted?! Or why it was done with such a rush?

Some may wonder if this news was a factor? From the London Evening Standard a few days ago.

In London, where rents are by far the most expensive in the country, prospective tenants saw prices fall 4.2 per cent year on year………The average cost of renting a home in the UK remained almost the same as at the start of 2016, rising just 1.8 per cent, compared to the 3.9 per cent annual growth recorded a year ago, thanks to a significant increase in the number of properties available.

It does make you wonder if they thought the buy-to let rush of early 2016 might depress rents? Anyway even the official numbers published today are seeing a fading.

Private rental prices paid by tenants in Great Britain rose by 2.0% in the 12 months to March 2017; this is down from 2.1% in February 2017………London private rental prices grew by 1.6% in the 12 months to March 2017, which is 0.4 percentage points below the Great Britain 12-month growth rate.

If London leads like it usually does…

Oh and Scotland is seeing rent disinflation albeit only marginal.

Scotland saw rental prices decrease (negative 0.1%) in the 12 months to March 2017.

So we see that rents are currently a downwards pull on the annual inflation rate.

The all items CPIH annual rate is 2.3%, unchanged from last month.

Whereas if we look at house prices we see this.

Average house prices in the UK have increased by 5.8% in the year to February 2017 (up from 5.3% in the year to January 2017).

The weasel words here are “owner occupied housing costs” which give the impression that house prices will be used without actually saying it. For newer readers this inflation measure assumes the home is rented out when it isn’t and then estimates the rent and uses that.

Comment

Whilst the headline number is unchanged there is a lot going on under the surface. For example the apparent fading of rents means that the new promoted measure called CPIH seems likely to drop below its predecessor or CPI in 2017. However under the surface there are different effects in different groups. Take a look at this from Asda.

The strongest decrease in spending power has been felt by the poorest households, whose weekly discretionary income in February was 18% lower than in the same month before, falling from -£20 to -£23. This implies that the basket of essential products and services is even less affordable than previous year for the bottom income group.

The clue here is the term essential products and services which of course is pretty much what central bankers look away from as for them essential means non core. You could not make it up! But what we are seeing here is the impact of higher fuel and food prices on the poorest of our society. Those economists who call for higher inflation should be sent to explain to these people how it is benefiting them as we wonder if there will be another of these moments?

I cannot eat an I-Pad!

Meanwhile the UK establishment continues its project to obfuscate over housing costs. The whole area is an utter mess as I note that @resi_analyst ( Neal Hudson) has been pointing out inconsistencies in the official price series for new houses. Back months are being quietly revised sometimes substantially.

A challenge to our statisticians

With the modern GDP methodology we see that the explosion in Airbnb activity has had a consequence.

Colin (not his real name) contacted the BBC when he discovered the flat he rents out on Airbnb had been turned into a pop-up brothel.

You see the ladies concerned were no doubt determined to make sure the UK does not go into recession.

Looking at both their ads, some of the rates were about £1,300 a night. So if they were fully booked for the two nights that’s £2,600 each – £5,200 in total.

But as we mull the issue and wonder how our statisticians measure this? There is a link to today’s topic as the inflation numbers ignore this. Meanwhile if there was evidence of drug use as well would they be regarded as a modern version of Stakhanovite workers by the Bank of England? As Coldplay so aptly put it.

Confusion never stops

 

 

More problems emerge with the use of GDP statistics

The credit crunch era has not be kind to users of Gross Domestic Product or GDP statistics. Or to be more precise they have not been kind to those who use them as the measure of economic well-being. Regular readers will be aware that I have written more than a few articles explaining their short-comings of which the most recent was the extraordinary goings on in Ireland where earlier this year the first quarter of 2015 saw GDP growth revised up to 21% for it alone. The number itself provides its own critique really. Today sees an update from the UK on the second quarter of 2016 but there have also been a couple of developments illustrating yet more GDP trouble.

Discovering Japan

If we take the advice of Graham Parker and the Rumour then we need to remind ourselves of two facts. The first is that the GDP series in Japan has been particularly troubled which has 2 main causes. These are that they have struggled to get the data at times and also that the “lost decade” experience has put the numbers under even more pressure. The second is that whilst most countries use the output version of GDP Japan uses the expenditure version ( if memory serves me right New Zealand does too). Only 2 links I can think of there which are the Pacific Ocean and rugby union and neither helps.

Just as an explainer there are three ways of measuring GDP which are to use output (by far the most common), expenditure or income. As they are measuring the same thing they should come to the same answer but they invariably do not. As an example I looked at the numbers for Portugal around 3 years ago and there was a variation of 4%. I will let that sink in as readers recall that these numbers are judged to 0.1%! There are varying ways of dealing with this problem which was dealt with in the UK by a past Chancellor Nigel Lawson who gave orders for the numbers to be merged and the differences therefore to be hidden. I discovered this when I asked for them as officially they are the same now.

This matters as in the credit crunch there was evidence from the United States that the income series was in fact performing the best. Hence I wanted to take a look at the UK. This comes up in the Japanese experience.

Bank of Japan

This has done some research into the subject and concluded this. From the Financial Times.

Japan has begun a revamp of its gross domestic product numbers because of rising concern about their accuracy, following a Bank of Japan report that suggests a huge understatement of growth in 2014………..According to an experimental index prepared by the BoJ, Japan’s economy expanded 2.4 per cent in 2014, rather than falling 0.9 per cent as the official data showed.

The shift here has been from the expenditure data ( what people spend) to the income data or what they earn and with thanks to Simon Cox of the Economist GDP growth now looks like this.

As you can see the most marked difference is in the year of the Consumption Tax rise where a recession becomes strong growth. This is how it was done.

Using comprehensive data from tax returns, instead of the surveys underlying the official GDP numbers, BoJ economists calculated an independent figure for gross domestic income — adding up all the earnings in the economy, which should, in theory, be identical to GDP. (He means official GDP here).

This gives them a higher number.

Those estimates suggest that not only did the economy grow but real output was significantly higher, at ¥556tn compared with ¥525tn in the official figures for 2014.

Why might this be so?

One is that young companies are not answering the official economic census, so those growing fastest are missed by the GDP numbers but covered when they file their tax returns.
Another possibility is that companies misreported their sales in 2014, using the old consumption tax rate of 5 per cent rather than the new figure of 8 per cent, biasing the numbers downwards for that year.

Personally I find it a bit hard to believe that companies did not know the Sales Tax rate! The first argument has some validity and is of course true in most places. Also there is a problem with this.

But the explanation almost certainly rests with a single underlying problem: fewer and fewer people willing to answer official surveys.

That is intriguing as it seems so un Japanese to me.

What is happening here?

By switching series has the Bank of Japan changed the measurement but not reality? That is a danger here and there is a strong possibility that there is a deflator problem ( how inflation is measured) and an element of this is confusing nominal with real GDP. It was an unusual time of inflation changes in Japan due to the Consumption Tax change.

Has it found something? Quite possibly as for example it fits with the business surveys or PMIs from back then although there is a world of difference between saying there was no recession and declaring 2.4% growth. It is odd though that the ordinary Japanese have not been telling is that there economic experience was better than this and we have the problem that we know ( UK and Euro area) that sales tax rises did depress economies there.

Of course there is an enormous moral hazard problem in the Bank of Japan declaring a new set of numbers which if we look at its policies would have it singing along with the Beach Boys.

Wouldn’t it be nice if we could wake up
In the morning when the day is new……..

Maybe if we think and wish and hope and pray it might come true

There was a more specific rebuttal according to The Japan Times.

The Cabinet Office disagreed with the assessment and the methodology used to calculate business profits. It’s unlikely that the economy in 2014 continued as strongly as the previous year, considering that 2013 growth was pushed up by people buying ahead of the tax increase, according to Testuro Sakimaki, executive research fellow at the Cabinet Office research bureau.

One more time we are reminded to wonder exactly what it is that we think we are measuring?

Imputed Rent

I would like to switch to the UK bit continue looking at the income version of GDP. In the UK this has received regular boosts in recent times from Imputed Rent which is where the numbers assume that people who are owner-occupiers get a notional rent for the property. I have described in the past how there have been substantial revisions to the series with no clear explanation of why. Well in 2016 they have changed yet again for once it looks like lower but again there is no clear explanation. Here from the Office for National Statistics is a statement from earlier this year.

Further, because the method is naturally aligned with the CPIH, the discontinuity in 2010 can be removed and the whole of the series will be on a comparable basis.

Ah excellent! It is now consistent with something which has been a shambles or as they put it “Not a National Statistic” The impact?

Their effect is to raise the level of the estimates of imputed rental and to lower the growth of the pre-2010 series.

Does it matter?

Imputed rental represents around 10% of GDP as measured by expenditure.

Whilst some of this is from the spring the issue is live again and I am chasing it up as the explanations such as they are do not convince.

Comment

On today’s journey we learn to have even less trust in the GDP numbers. This is not the fault of the statisticians who mostly do their best it is that they have been sent on a journey that has elements of a fool’s errand. Add in some political interference and you have quite a toxic mixture. The income series on which the Bank of Japan is so keen has its uses but also as I have highlighted its problems.

Ironically in a way the UK had some good news this morning.

UK GDP in volume terms was estimated to have increased by 0.7% in Quarter 2 2016, revised up 0.1 percentage points from the second estimate of GDP published on 26 August 2016.

Although of course what does 0.1% tell us? There was a welcome rise in investment which so many told us would not be happening and places which pushed a post EU leave vote crisis theme like the FT  will need  a large slice of humble pie in reporting this. From the UK ONS.

0.4% growth in services in July, driven by retail, films and computer programming.

I guess we will not hear from Bank of England Governor Mark Carney today either!

Meanwhile those who remember my theme that our numbers for the important services sector need urgent work can smile and be worried simultaneously by this.

When comparing Quarter 2 2015 with Quarter 2 2016…. 11.6% growth in exports of services, which contributed 1.3 percentage points to GDP growth.

 

The problem that is Imputed Rent and hence GDP

Over the lifespan of this website I have explained quite a few problems with our main measure of economic well-being and growth called Gross Domestic Product or GDP. This time I will focus on the problems and issues caused by a rarely discussed issue called imputed rent. This concept skulks away in the back ground partly because it is from the income version of GDP and the main figure is the output version. For those who are not aware of the state of play there are 3 ways of measuring GDP which are output, expenditure and income. Output is the most commonly used and if you here GDP mentioned then invariably that is what is meant but not every version is as for example Japan has a more expenditure based calculation.

There have been two roads which have led me to the Income GDP version. They are that the American numbers were a better guide post credit crunch to economic activity than the output version, and my interest in the housing sector reflected in this instance by the rent issue. Sadly such numbers are restricted access in the UK as a problem in particular occurred in the late 1980s under the then Chancellor but now Lord Lawson. In theory the 3 versions are supposed to come to the same answer but back then the variation was wide enough for him to order our statisticians to prioritise the output numbers and “adjust” the other versions. I can give you an example from Portugal of how the 3 numbers can vary as a while ago when I was looking at the data the divergence was 4%. It makes you think about those who discuss 0.1% changes does it not?!

What is Imputed Rent?

The story starts here.

In the national accounts, owner occupiers are deemed to be unincorporated businesses producing housing services, which they then consume.

Are “deemed to be”! So here is the first issue which is that it does not actually exist. After noting that let us press on.

The principle involved is to impute a rental value for an owner-occupied property, which is the same as the rental that would be paid for a similar property in the private rented sector. The imputed rent methodology calculates rent for owner occupiers and rent-free dwellings.

Why is this done. The US Bureau for Economic Analysis explains.

 The largest imputation in the GDP accounts is that made to approximate the value of the services provided by owner-occupied housing.  That imputation is made so that the treatment of owner-occupied housing in the GDP is comparable to that of tenant-occupied housing, which is valued by rent paid.  That practice keeps GDP invariant as to whether a house is owner-occupied or rented.

Their explanation is from 2006 when Imputed Rent was already 6.2% of GDP and the largest imputation which combined were 14.8% of GDP. It then argues this.

Without imputations, the GDP story is incomplete and can be misleading.

The other side of the argument is that including things which do not exist – owner occupiers do not receive Imputed Rent – is misleading.

Measurement of Imputed Rent

As it does not exist it cannot itself be measured and the only route to it is to measure actual rents. This poses its own problems in practical terms as this from the UK ONS demonstrates.

Imputed owner occupier rent is calculated from an average rent per room being multiplied by the total number of rooms in owner-occupied dwellings. Rent per room is calculated from Actual Rental (see section 02.4.1) and number of rooms rented (based on Living Cost and Food survey – LCF).

In the UK they will have some idea of the number of rooms but there will be errors in those numbers. However the main issue is whether we have numbers for rents which are reliable. I am sure that there are issues in every country but the UK has had particular problems and this is linked to my articles on the CPIH measure of inflation which includes rents. My view is that this has been a shambles illustrated by the way that the UK establishment had to abandon its rental estimates because they were in disarray.

You might think that a complete change to the actual rental numbers would have a big impact on Imputed Rent. In fact they seemed to sail through it pretty much unscathed as all sorts of other adjustments were made to provide the same answer. Or as Kylie would put it.

I should be so lucky
Lucky, lucky, lucky

As the luck quotient rose the credibility one fell.

Upwards Revisions

Back in the 2013 Blue Book the UK ONS decided the Imputed Rent numbers had been too low.

There are upward revisions to the level of total annual HHFCE (national concept) in all years from 1997 to 2011. The largest revisions, of just under 2% of total HHFCE, are in 2008 to 2011.

HHFCE is Household consumption and increasing it by 2% is a big deal and it was Imputed Rent that did it. Actually it more than did it as looking at 2010 will explain. UK household consumption and hence GDP rose by £17.1 billion of which the rise in Imputed Rents was £33.6 billion. The difference was a rise in estimates of repairs of £12.7 billion and some smaller items such as smuggling.

The New Economics Foundation weighs in

Just over a year ago the NEF gave an idea of scale.

Inclusion of how much home-owners would pay if they actually rented boosted UK GDP in 2014 by £158bn – a 8.9% share

We also got an idea of the scale of the housing and Imputed Rent boom.

A growing proportion of GDP is nothing more than earnings from property. 12.3%  of the UK’s measured GDP in 2014 was rent and “imputed rent”…….Since 1985, rent and imputed rent have almost doubled as a share of GDP, from 6.2%.

Ch-ch-changes

In the last few days and weeks the situation has changed again and let me show how.

these changes will have a substantial impact both on imputed rental itself and on total current price GDP.

Okay how? I summarised it thus on the Royal Statistical Society website.

For those who have not looked at the numbers then nominal UK GDP has been revised up by at least £50 billion in each of the years 1997 to 2006 due to Imputed Rent and then by a declining amount up to 2011. To give an idea of scale VAT fraud is considered a big deal but changes to it top out at £2.1 billion in 2011.

The official view on the changes is as shown below.

Although this improved the series for the most recent period, bringing it in line with the CPIH, it also led to a discontinuity (which has now been removed in the new method).

The discontinuity peaked in 2010 and I would tell you by how much but the link to the numbers on the official ONS site take you to a page which does not exist. Friday’s update tells us this.

In 2014, annual real GDP growth has been revised up by 0.3 percentage points from 2.9% to 3.1%,

Not the strongest grasp of mathematics there I think! Anyway there was yet another change to Imputed Rent as it added 0.1% to economic growth in that year (and in 2012 too).

Comment

You are perhaps waiting for an idea of scale so let me help out from the last quarter of 2015 when Imputed Rentals in the UK reached £43.2 billion in current price terms compared to £24 billion a decade before. That is a lot for a number which not only has theoretical issues in terms of its concept but the way we have tried to measure it has been very flawed as otherwise we would be needing all these “improvements” would we?! There was an obvious problem here in a nation the size of the UK.

The LCF data are based on around 400 households’ rental prices per quarter,

So whilst I welcome the efforts to improve the quality of the UK data on rents – which also feeds into the inflation numbers – there is a clear problem with what we have been told in the past. This feeds into less confidence in what we are being told now. At a time of house price booms this poses more than a few questions for the UK economic landscape and as for the Imputed Rent numbers well they continue to sing along with Jeff Lynne and ELO.

You took me, higher and higher
It’s a livin’ thing,
It’s a terrible thing to lose
It’s a given thing
What a terrible thing to lose.

Oh and this whole episode provides another critique to nominal GDP targeting.

Is that it for UK Retail Sales?

Today sees the publication of one of the bedrocks of the recent UK economic improvement where lower inflation led to higher real wages which resulted in strong retail sales numbers. This has boosted Gross Domestic Product via consumption. If you go back to January 29th last year you will see that I pointed out this would be a beneficial impact on the UK economy of the oil price fall. However as I pointed out on Tuesday we are seeing the influence of that move start to wane a little and it makes us wonder about real wages and retail sales. This is reinforced by the fact that wage growth has not only not picked up it has moved between flatlining and fading.

Average weekly earnings for employees in Great Britain increased by 2.1% including bonuses.

Next

The mostly clothes based retailer Next has weighed in on the subject already today.

The outlook for consumer spending does not look as benign as it was at this time last year. Although employment rates are at record highs, growth in real earnings (the difference between wage growth and inflation) slowed markedly from September last year. In addition, growth in output across services, manufacturing and construction all decelerated throughout the course of the year.

They also expect to do worse than the general trend.

we also believe that there may be a cyclical move away from spending on clothing back into areas that suffered the most during the credit crunch.

Indeed for a company which has been doing well the numbers are rather downbeat.

We now expect NEXT Brand full price sales growth for the full year to be between -1.0% to +4.0%, with a mid-point of +1.5%…….However at this stage we think it is best to prepare ourselves for what could be a difficult year.

Oh and did I say downbeat?

The year ahead may well be the toughest we have faced since 2008.

Some care is needed here as Next has done well and some of this will be specific to it and some to the clothing industry but of course that is a component of UK retail sales. The share price is down over 8% as I type this.

Why are so many central banks cutting interest-rates?

This week has seen several moves making I think 48 in total now for 2016. This morning has seen this which provides some insight as to what is happening in China. From Bloomberg.

The central bank lowered the benchmark discount rate by another 12.5 basis points to 1.5 percent, it said in a statement Thursday in Taipei.

It was also be remiss of me not to welcome a new member to the negative interest-rates club.

The Monetary Council of the Magyar Nemzeti Bank reduced the central bank base rate by 15 basis points to 1.20%, in effect from 23 March 2016.

This made the overnight rate some -0.05% in Hungary. Have you spotted the size of the moves ( 0.125% and 0.15%). I would make them wear a clown’s outfit if they wanted to announce such moves as who believes such a move has any material impact?

However the international scene remains troubled which has implications for us in the UK.

UK Retail Sales

Firstly the news continues to be good.

Year-on-year estimates of the quantity bought in the retail industry showed growth for the 34th consecutive month in February 2016, increasing by 3.8% compared with February 2015. The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, showed growth for the 27th consecutive month, increasing by 0.8%.

We also see the same main driver.

Average store prices (including petrol stations) fell by 2.5% in February 2016 compared with February 2015, the 20th consecutive month of year-on-year price falls.

We are spending some 1.4% extra to get volume gains of 3.8%. Excellent! I would make all the “deflation nutters” have to write that on a blackboard in the manner of Bart in The Simpsons.

However we also are getting signs that the peak may well has passed us by.

The amount spent in the retail industry increased by 1.4% compared with February 2015 and decreased by 0.7% compared with January 2016……..Compared with January 2016, the quantity bought in the retail industry is estimated to have decreased by 0.4%.

Also we see what may have spooked Next.

In February 2016, the quantity bought in textile, clothing and footwear stores decreased by 2.4% compared with February 2015 and by 0.4% compared with January 2016.

For once the weather may genuinely be to blame but let’s not go there as it gets the blame far too often.

Imputed Rent

This is an important topic which gets little media time. It is required in the income version of the GDP numbers to make them balance with the expenditure and output ones. Believe it or believe it not but house owners are “imputed” to receive rent and this is added to GDP. In my opinion this causes a litany of problems and if you read my articles on the subject not the least of this is our lack of knowledge of UK rents inflation as the CPIH shambles uses the same data.

Yesterday saw another piece of odd behaviour in this area. From the Office for National Statistics.

The decrease in weight is being driven by three classes. The largest decrease, the Imputed Rentals class is unique to CPIH. The class has fallen by 13ppt from 178ppt to 165ppt.

So in the middle of a housing boom when they have only just told us that house prices are rising at an annual rate of 7.9% and we have estimates of rent increases of 3.3% which both far exceed inflation we see a reduction in weights! Eh?  I would like to add that the Imputed Rental series has seen substantial revisions in recent years.

You may enjoy this bit as you note above that the weight has fallen because the explanation tells us this.

Further improvements to the methodology for actual and imputed rentals in the National Accounts will be introduced in BB16. The changes will result in further upward revisions in the expenditure on imputed rents, which will in turn increase the OOH weight in CPIH

Up is the new down.

Oh and never believe anything until it is officially denied.

The revision to the OOH index will therefore directly affect the relevant household expenditure current price estimates in the National Accounts, but not the volume estimates.

So you have more inflation but it does not affect volume. Odd because the past changes  boosted it and GDP  was Yazz right about this series?

The only way is up baby

Good job we do not rely on the GDP numbers…….

Comment

The UK Retail Sales series has been a good news story for the UK economy and I do not expect that to end but we are entering a phase which will see some slip-sliding away. If we look at the runes the price of crude oil may well be dipping again as it falls below US $40 for Brent Crude today but a return to past lows would not be as cheap after we buy it with a depreciated UK Pound £ which is below US $1.41 as I type this. However we should be grateful for what we have seen as by contrast the media hype about economic recovery in Italy has seen this reality today. From Istat.

The average of the last three months compared to the previous three months decreased by 0.1%.The unadjusted index decreased by 0.8% with respect to January 2015.

If we move to the GDP numbers then we have the issue of what to do about Imputed Rent? There are theoretical issues but today let us stay with the simple practical one that we in the UK have enormous trouble in measuring it and this song seems appropriate.

With their up diddley up-up and their down diddley down-down.Up! down! Flying around!Looping the loop and defying the ground!

Let me finish by wishing you all Happy Easter and a good news story from Dave Grohl of the Foo Fighters who responded to a call for help with this letter to Cornwall Council.

I believe that it is crucial that children have a place to explore their creativity and establish a sense of self through song. The preservation of such is paramount to the future of art and music. Without them, where would we be?

 

http://foofighters.com

Media

If you want to know more about the UK current account and its problems in an audio format here is a piece I did for Share Radio.

https://audioboom.com/boos/4343549-what-is-a-current-account-deficit-and-should-we-be-worried-independent-economist-shaun-richards-explains

Meanwhile if we move to the world of video here is me on TipTV discussing central banking policy.

http://www.tiptv.co.uk/finance/are-central-banks-too-worried-about-making-a-mistake/