Policymakers continue to struggle with UK inflation, but do they really have any control over it? David Coombs, head of multi-asset investments at Rathbone Unit Trust Management, takes a look.
Measuring consumer price inflation in an economy should be relatively straightforward. Let’s take a hypothetical household and a basket, and place in it those goods and services economists believe the household purchases every month (the consumption basket). Then, we weight those baskets according to how much this household might spend on those goods. Next, we measure the price of this basket at a set interval over a period of time and compare its value from when we first calculated it. If the value of this basket is rising over time, then it is fair to say that prices are rising, given ...
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