The jitter plot that could make us slightly less jittery about inflation

  1. We’ve seen big price increases (dots high up on the graph) in some very low-labour-intensity (green) items, such as petrol, diesel, natural gas, and electricity. The prices of these items are set (broadly speaking) in global markets, so UK wages will have very little impact on future inflation here.
  2. We’ve seen most of the dots move above the zero line — so most items increased in price between January 2021 and January 2022. This is in stark contrast to, say, during 2020, when the same dark green dots tended to be below the line, i.e., exhibit big drops in prices.
  3. And we’ve seen the more stable, labour-intensive red and orange dots in the middle of the graph edge gradually up over time, but at a fairly moderate pace. In January 2022 (last column), most labour intensive services (such as child care, education, and restaurants and bars) saw price increases in the range of 3–5%, relative to January 2021.

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Tera Allas

Tera Allas

I help complex organisations make the right strategic decisions through innovative, insightful and incisive analysis and recommendations.