Good morning. Firstly an apology: although you were divided about whether Australia’s nearest neighbour was Papua New Guinea, Timor, the Torres Strait or Indonesia, you all (rightly) were united in pointing out it certainly wasn’t New Zealand. I should have stuck with what I knew for sure, which is that the UK is much less remote than Australia. Hopefully, I will avoid further howlers in today’s note, on inflation and its political consequences.
The 6.8% solution
The good news: headline inflation has fallen to 6.8 per cent. The bad news: the headline fall masks that the underlying pressures driving up inflation have yet to ease in the UK.
I’m not going to opine on the economics, because the reality is I would just be paraphrasing Chris Giles and Lucy Fisher’s write-up. But I do have some thoughts on the politics.
The first is that, in terms of how voters feel about their own situation, whether or not Rishi Sunak hits “his” target of getting the rate of inflation to halve by the end of the year is much ado about nothing. Most voters think that the target means something else entirely — not just falling inflation but very sharp deflation in the cost of goods, services, etc etc. That is not going to happen and as a result the government is going to continue to face a lot of voter anger over inflation.
But the second is that the target matters a great deal, because, I think, if UK inflation hasn’t halved by the end of the year, it means the Conservative election campaign will face a constant drum beat from the broadcasters and most of the press about Sunak missing his targets. If he hits it, even if the other targets go awry, the mood music around the Tory campaign will be much better.
In a sense, that’s ludicrous: the pledge was always a silly one, because the government does very little to directly shape it. Nonetheless, in terms of the politics of what is essentially going to be a very, very, very long election campaign, it matters a great deal.
Now try this
I mostly listened to Tasmin Archer’s excellent 1992 record Great Expectations while filling in for Robert Shrimsley in today’s paper. (Fortunately, someone else is filling in for his funny slot: I am still getting angry letters about the last time.)
Top stories today
Waiting-time targets | Health experts welcomed the UK government’s plan to cut cancer waiting-time targets but warned that the pledge had to be matched with resources.
Data leak arrest | Police in Northern Ireland have arrested a man after the accidental data leak last week that identified the force’s entire 10,000 officers and staff.
Spook countermeasures | UK arrests are part of wider western moves to disrupt Russian spy networks.
Slipping standards | NHS capital investment cuts have left England’s hospitals crumbling.
BAE aerospace deal | The UK’s largest defence company has agreed to buy the aerospace business of US conglomerate Ball Corp in a $5.6bn deal.
Source: Economy - ft.com
