James Moore: Figures of comfort

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The Independent Online

Outlook: Some good news for the Bank of England (and goodness knows it needs some) in the form of inflation, which is on the slide. It should be noted here that this is largely as a result of factors such as fuel and commodity prices that are outside the influence of the Bank's Monetary Policy Committee, even if the latter had the flexibility to raise rates.

But it has also helped that the Chancellor's questionable decision to hike VAT to 20 per cent in January last year has just about washed through the system.

What the fall in the CPI measure of inflation to 2.8 per cent does do is provide the MPC with some comfort. It is well within the target range of 2 per cent plus or minus 1, so there won't be that farcical "letter of explanation" the Bank's governor Sir Mervyn King has to send to the the Chancellor, George Osborne, and then publish.

Even though economists are still identifying upward pressures, earnings (average rise of 0.6 per cent) aren't among them and aren't likely to become an issue for some time to come, given that most people who have a job are too scared of joining the ranks of those without one to kick up a fuss.

So, then, time for another £50bn bout of quantitative easing? The efficacy of the MPC's favoured method of pumping money into the economy is questionable. But against the backdrop of an unrelenting crisis of global magnitude (see the eurozone), at least it gives the impression of doing something. Which must be comforting to someone, somewhere.