Weekly Updates
Weekly Updates
- Economists are the minstrels of the modern age—roaming the world telling tales of economic interdependencies and singing songs of price elasticities. Story telling is a powerful force in shaping economic understanding. Sadly, not all the economic stories are true.
- The UK’s March consumer price inflation rate slowed less than expected. Social media promptly went into a frenzy of hashtags, with a common narrative being that Brexit was to blame.
- If Brexit was behind the higher inflation, then traded goods prices should be rising more rapidly than in Europe. This is not the case. UK inflation rates for furniture, cars, televisions, food, etc. are lower than in Germany—a country that has not yet left the EU. UK energy inflation is higher than in Europe—but that is due to local peculiarities of price regulation.
- Net, Brexit has been an economic negative for the UK. That does not mean Brexit can be blamed for everything. The current inflation problem is profit-led. Companies need a convincing excuse to get customers to accept price increases as “fair” and allow them to sneak in a profit margin increase. Blaming Brexit for something Brexit did not do is just such an excuse, and such “fake news” may actually make UK inflation worse.
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