Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Due for 9-10% Pull Back? - 25th April 19
Dow Transportation Stocks Sector Is Testing Resistance - 25th April 19
INSOMNIA i64 UK Best Games Festival Vlog of What it's Like to Attend - 2019 - 25th April 19
In Just 45 Mins., Learn to Spot New Opportunities in ANY Market for FREE! - 25th April 19
If This Pattern Holds True, the US Economy Could Face the Worst Stagnation in History - 25th April 19
8 Reasons Why Investment in Education Always Pays Off - 25th April 19
Want To Earn A Safe 5% In Fixed Income? Buy Preferred Stocks - 24th April 19
Can Gold Price Rise Without a Rate Cut?  - 24th April 19
Silver’s Next Big Move - 24th April 19
How Can a College Student Invest Wisely? - 24th April 19
Prepare For Unknown Stock Market Price Action As New Highs Are Reached - 23rd April 19
Silver Plays a Small but Vital Role in Every Portfolio - 23rd April 19
Forecasting 2020s : Two Recessions, Higher Taxes, and Japan-Like Flat Markets - 23rd April 19
Gold and Silver Give Traders Another Buying Opportunity - 23rd April 19
Stock Market Pause Should Extend - 21st April 19
Why Gold Has Been the Second Best Asset Class for the Last 20 Years - 21st April 19
Could Taxing the Rich Solve Income Inequality? - 21st April 19
Stock Market Euphoria Stunts Gold - 20th April 19
Is Political Partisanship Killing America? - 20th April 19
Trump - They Were All Lying - 20th April 19
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

UK CPI Inflation Soars Above 2% Targeting a Break Above 3%

Economics / Inflation Jan 18, 2010 - 05:28 PM GMT

By: Nadeem_Walayat

Economics

Best Financial Markets Analysis ArticleUK CPI inflation is expected to bust through 2% tomorrow (Tuesday 19th) towards a target of 2.6% which was set over 3 weeks ago in the in-depth analysis and UK inflation forecast for 2010, that forecast a rise in UK inflation to above 3% early 2010, spiking as high as 3.6% and staying above 3% for most of the year only dipping to 2.7% by the end of the year as illustrated by the below graph.


Whilst the forecast for December data is at 2.6%, I would NOT be surprised if CPI inflation actually comes in at an even stronger rate of as high as 2.8% which would truly result in a shock reappraisal in the mainstream press that is still in large part lost in the midst's of an inflation / deflation debate, though I don't expect any of the permanently deluded academic economists stuck in the myth of deflation to see sense no matter how high inflation soars.

The reasons for Decembers anticipated inflation surge are:

  • Strong UK Economic Recovery underway.
  • Oil prices having trended higher to above $80
  • Impact of the 2008-2009 sterling depreciation of approx 25%.
  • Petrol price rises
  • 2.5% VAT increase back to 17.5%
  • £200 billion of Q.E. or money printing with more to come during 2010 regardless of the consensus view that it has ended.
  • Strong global economic recovery underway, with booming emerging economises (especially china) feeding the inflation fires as commodities prices soar.

Further analysis on the sustained inflation trend to above 3% is detailed in full here.

The mainstream press will tomorrow respond with many inflation shock and awe headlines to grab readers attention as a consequence of the surge in UK CPI inflation, as the mainstream press belatedly starts to awake up to the reality of the inflation mega-trend and will thus and quickly produce much copy in an attempt to explain why inflation soared during December though at least several weeks behind the curve and without any real depth of analysis to enable accurate projections to be formulated.

I also expect many of the so called "think tanks" to seek to revise forecasts for UK inflation and interest rates which only as recently a few days ago were forecasting little or no change in UK interest rates for 2010 as illustrated by earlier today's Ernst and Young ITEM Club forecast that expected no change in UK interest rates during 2010.

The immediate market reaction can be expected to be for stocks to fall and sterling to rise as both move towards discounting higher UK interest rates.

The full implications of the inflation mega-trend will follow in a FREE ebook which I am to complete within a week, to receive this in your email in box ensure you are subscribed to my always FREE newsletter. Below are forecasts for UK interest rates and economy for 2010 and 2011.

UK Interest Rates Forecast 2010

My in-depth analysis and forecast of 13th Jan 2009 forecast that UK interest rates would rise to 3% by mid 2011, and end 2010 at the target rate of 2%.

UK Economy GDP Forecast 2010

My in depth analysis and forecast as of 31st December 08 forecasts strong UK economic growth of 2.8% for 2010 and 2.3% for 2011 which follows the forecast for 2009 for GDP contraction of -4.75% as of Feb 2009.

Source : http://www.marketoracle.co.uk/Article16583.html

Your analyst generating tomorrow's headlines three weeks ago.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market . Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Norman
19 Jan 10, 21:36
Well done

Spot on! CPI hit 2.9%


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules