The BoE this morning published last month's inflation numbers:
CPI was 3.2%, up from 3.0% in January
RPI was 0%, down from 0.1% in January
That's right, CPI has gone up! And they've only just started the inflationary money printing - CPI was supposed to go down this month! We're supposed to be fighting a terrible deflationary collapse but the Consumer Prices Index, the index the government claims to be targeting, is nowhere near its target and is headed in the wrong direction.
The BoE governor, Mervyn King, has written his usual letter of apology to the Chancellor of the Exchequer. Read it here. Actually I'll save you the bother: he says sterling has fallen 28% since Summer '07 and we import loads of stuff so what did you expect? All the imports have gotten more expensive.
Well, I for one expected this supposedly clever man to know that dropping interest rates onto the floor would knock the legs from under the pound and push up prices.
Oh, and in case anyone thinks RPI at zero percent is somehow a good thing - let's have a little peek behind the numbers shall we? There are two major reasons RPI is low, 1) low mortgage rates due to the interest rate being low, currently 0.5%, and 2) oil having dropped from $140 per barrel to the current $50 approx.
Both these things happened last year and within a few months will be dropping out of the back end of the year-on-year index, and what will the index do then? Well, unless he's nailed some of the real inflation by then, the food prices hikes for example, RPI will shoot up to join CPI. If you exclude mortgage interest payments RPI was actually 2.5% last month!
Now let's have a look at how that government mouthpiece, the BBC, tried to spin this bad news.
Here's their first take...
And here's the rewrite after the blogosphere went incandescent with rage at the blatant attempt to conceal bad news...
Both articles had the same URL. (Click on the images to enlarge them.)