Fashionable Trousers Down, But Not as Far as Inflation

Posted on Mar 24, 2021. by NTI

Economists can't help themselves and will be running around all day today (Wednesday 24 March) trying to extract meaning from the senseless. The Office for National Statistics (ONS), who would be occupying wall space on NTI's fantasy 'execution list', said the consumer prices index measure eased to 0.4% in February from 0.7% the previous month. Of course, some of this has to be down to the fact that no-one is out there buying anything, so putting upward pressure on prices, but it is also down to a fall in clothing and footwear prices of 5.6% in the year to February 2021, the largest fall since November 2009. Fashion is cheaper this morning, but that doesn't apply to what you have chosen to wear today.

Could it be that we are all a little less fashion-conscious, at least about our bottom halves, as Zoom only requires our top bits to be reasonably clad? Certainly Jane Fraser, the new Scottish boss of Citigroup, may have had this in mind when she banned internal video calls on Fridays, granted all staff an extra day off and warned that the convergence between work and home life during the pandemic has become unsustainable. She has demanded “Zoom-Free Fridays”, telling staff that internal meetings would be audio-only on that day. Jane also announced a company-wide “Reset Day” on May 28, granting Citi’s 210,000 employees an extra day off.

Back to inflation, the Bank of England added a little matt to the most recent numbers, saying it expects inflation to rise sharply back towards its 2 per cent target in the first half of this year, reflecting the rise in Brent crude prices and cap on default tariff household energy prices. They are putting so many projected numbers out there at the moment that surely one has to stick and be close to right?

Certainly they called the unemployment rate wrong in their last forecast, as it fell unexpectedly in the three months to January, even though the country entered a third national lockdown. After climbing to 5.1 per cent in the previous quarter, the jobless rate fell back to 5 per cent, according to the ONR. Their economists had been forecasting 5.2 per cent. How is this possible? The job retention scheme is playing its part in keeping a lid on unemployment, with a fifth of the working population still on furlough, but the Bank of England, undeterred by being wrong about everything else, says it expected unemployment to climb to 6.5 per cent after the support is withdrawn in September.

For those economists still clinging to their Desmond Tutu from Keele, there is bewilderment that employment rose by 220,000 between December and January, even though the economy shrank by 2.9 per cent that month. It's like there is a global pandemic, or something, and all decent bets are off.

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