Do you remember when Zimbabwe was the country that had a $100 trillion dollar note but it was only worth a few US dollars? Well, last week the Zimbabwean government announced that consumer prices reduced last month to an annualised inflation rate of 3%, while in the US’s Bureau of Labor Statistics announced that the American Consumer Price Index (CPI) rose 0.5% in February: taking the country up to an annualised inflation rate of 6%
Similarly, we have just learnt from the Office of National Statistics that the UK’s Consumer Prices Index annual rate of inflation went up from 4% in January to 4.4% in February. Inflation in the country’s Retail Prices Index (RPI) rose from 5.1% in January to 5.5% in February. In other words, the highest official rate for more than 20 years.
Now, for all you enthusiastic Keynesian types out there don’t worry. This has nothing to do with governmental printing presses or any of your marvelous policy procurements. You see, the increases in inflation have been purely driven by “volatile” food, energy and clothing costs, and in no way reflect fundamental and longer-term “underlying trends”.
US petrol up 4.7% (an annualised rate of 56%)? Irrelevant. US public transport up 1.9% (an annualised rate of 23%)? Not important. Food consumed by American households up 0.8% (to an annualised rate of 10%)? Well, such is life in a ‘volatile’ world.
The only thing is that unlike the UK and the US, Zimbabweans have clearly discovered the secrets to a more stable and tranquil world. Yes, that’s right, much less volatility there. That explains it.