Inflation

Google Business News the other day brought to me an interesting collocation of articles. This article reckoned inflation will drop below 1%, while this one brought warnings of inflation reaching 7%. Tim Congdon (in the former article) warned the slump in possibly overvalued oil, in combination with insufficient liquidity in companies, may drag headline inflation down below 1% in 2009, while the Chelsea Building Society (in the latter article) uses recent price increases as evidence that more inflation is still to come.

Such a bewildering range of opinions epitomises the current situation the UK and indeed the world finds itself in. Policymakers’ three-way split in July over interest rates, the recent hiccough in oil prices, and now this; nobody has a clue what should be done on a macroeconomic scale or what to invest in to benefit from it. With even hedge funds struggling and ‘money-saving ideas’ becoming more and more ridiculous including freeganism, the apocalyptic outcomes predicted by the pessimists suddenly don’t look so funny any more.

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