Who'd be Jeremy Hunt? It's a question that is unanswerable.
Whilst posing impossible teasers let us try another. Who's side (other than their own) are OPEC on? During the pandemic, when no-one was driving anywhere and the weather was too good to need the heating to be on, Opec had to boost prices by cutting production dramatically. They did so by slashing more than nine million barrels per day. Then along came the next global crisis following Russia's invasion of Ukraine, and the price of Brent crude soared to more than $130 a barrel. Three crises, one impossible situation and five crashes later the price of a barrel had fallen back to little above $70 a barrel, which is a 15-month low.
It is thought that Saudi Arabia, which is currently chairing Opec+, needs to have the price of Brent crude rising to $80 (£65) a barrel or more to cover its Government spending and import bill, so the price of fuel will rise again. This comes on the back of a report that household energy bills are set to plunge below £2,000 in the autumn for the first time in 18 months, amid a sharp fall in wholesale prices. The price cap set by energy regulator Ofgem, which was £4,279 in January, could hit £1,870 in October, analysis by Investec’s Martin Young shows. July’s cap has been set at £2,074.
To put this into perspective, this represents a huge fall from the peak price cap in January, but is still almost twice as high as the pre-crisis average of £1,100. It if hadn't been for Opec+'s announcement as reported above, this next whammy would have been the second of the 'double', as the price for petrol and diesel are also tumbling fast. The average price of a litre of diesel fell by 12p in May, the largest cut seen by the RAC since it began tracking fuel prices in 2000.
Energy prices down, the cost of fuel at the pumps down; it almost felt safe to be reaching for the Booking.com app with the sun encouraging torrents of serotonin to flood our brains. But first we must return to the question at the top of this article. Who'd be Jeremy Hunt? He and his mate Rishi have made reducing inflation in 2023 a priority. When the IMF and Bank of England start reporting that the UK will be a land of growth, not recession, this year it peaks the interest of inflation which remains head and body above the parapet at the moment. What is the alternative? Increase interest rates and encourage a drag in prices, and face the real possibility of recession?
Maybe there is another way. The fact of inflation between now and the end of the summer is part of the established story. It isn't going anywhere in a downward direction very fast, and any interest rate decisions in the coming weeks will not affect it, given the lags in monetary policy.
Why don't they leave interest rates where they are? It should halve anyway, as energy-price effects turn favourable. Household energy bills last month were 24 per cent up on a year earlier, but that will soon drop to zero. Does the Bank need to drive the economy into recession to defeat inflation? Two members of its Monetary Policy Committee have voted against recent rate rises because of the risk of over-tightening.
They could just 'leave it alone'. Input price inflation, reflecting industry’s raw material and fuel prices, has come down from 24.4 per cent in June last year to just 3.9 per cent now. Output price inflation, sometimes called factory gate inflation, has dropped from 19.7 to 5.4 per cent, although this disguises the fact that prices have, in effect, been flat since last summer. Globally, food-price inflation peaked last year.
