Excellent news everyone! The prime minister has succeeded in bringing down inflation!
A triumph – hailed this morning on his social media feeds – that is all the more remarkable because responsibility for bringing down inflation and the tools necessary to do the job have been the exclusive property of the Bank of England for 25 years now.
If Rishi Sunak is telling us that he has dictated interest rate rises and policy to the Monetary Policy Committee of the Bank of England I think we should be told. The markets would be very interested, to put it mildly.
They after all have spent decades being comforted by the fact that interest rate policy and inflation targeting has been removed from the less than impartial hands of politicians who were always suspected, quite rightly, of political motives rather than purely economic ones.
Perhaps the PM took time off from firing the home secretary and fawning over Elon Musk to attack inflation in other ways? Strangely the Office for National Statistics seems to be unable to find any evidence that he has done anything like that.
The large fall in inflation last month – from 6.3% to 4.6%, thereby meeting Sunak’s target – was caused by the fact that last year’s massive hike in international oil and gas prices has now dropped out of the calculations.
What the PM has done to bring down prices on the huge international energy market is hard to say. He doesn’t seem to have ended the war in Ukraine, nor has he ended the embargo on Russian oil nor persuaded the Saudi Arabians to pump more oil and gas.
In fact, some might say that the PM’s target to halve inflation was just a cynical calculation that energy price hikes would inevitably fall out of the calculation this month and inflation would therefore fall.
Certainly Sunak would be hard-pushed to claim any credit for steady-as-you-go food prices, which are one of the other factors in this month’s inflation figures. While what the Tory government has done to bring down hotel prices is a mystery to me.
It is also rather strange that the PM seems willing to take all the credit for the fall in inflation but none of the blame for the consequences.
High interest rates have forced up mortgages, increased the cost of borrowing, squeezed already desperate households and reduced economic activity across the country. That is what the Bank of England has felt forced to do to counter inflation and make sure that it does not stay in the system, creating a spiral of ever higher wage demands and higher prices.
But that does leave the prime minister rather exposed to a certain line of questioning.
When during a quiet evening at Chequers he is sitting in a comfortable chair by a roaring fire and he lifts one of his daughters onto his knee, what does he say when she looks up admiringly at him and innocently asks: “What did you do in the war against inflation, daddy?”
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