Inflation: I’m wishing on a stat, to follow where you are…

If being entirely honest, we’d accept our wish-lists invariably include items that, without some huge leap of wealth, opportunity, or technology, will always remain beyond us…by Savvas Savouri

 
Well, whilst most elements on my wish-list are unicorn-like, there is one wishful thought that could easily be fulfilled. I refer here to my not so much wishing on a star, but wishing on a stat. Yet, whilst the stat I crave is perfectly attainable, it is kept frustratingly unavailable.

I write here of consumer price inflation being released more frequently than the monthly statistic we are frugally given. And in claiming my wished for stat is unattainable, my frustration in this denial is directed at a combination of the ONS and Bank of England.

After all, between them these institutions could easily engineer and use much higher frequency data for not only the CPI, but many other keenly awaited economic metrics currently rationed to us monthly.

The reality is that technology exists to enlighten us far sooner reliably on how prices et al., are moving. As for the criticism that one should be careful of what is wished for, my rejoinder is to ask why a move to higher frequency reporting of the CPI would be considered regressive and not progressive?

After all, from the perspective of capital markets, greater inflation visibility could hardly fail to dampen all too common abrupt shifts in such crucially important factors to the working of the UK economy as swap rates and sterling.

For higher frequency releases would act to smooth the delivery of information, and as such reduce the likelihood of abrupt data-shifts “surprising” naturally risk-averse debt, currency and capital markets generally. A more frequent and so more timely CPI would not only aid the MPC, but more expose it to rightful criticism when it moves wrongly and/or slowly.

There is some irony that whilst we have come to accept – indeed, demand – rapid Amazon-like delivery in many things, we have not made the same demand for monetary metrics. To be clear, and to repeat, the same technology that allows us to be delivered to in near-real time could be harnessed to achieve higher frequency monetary and indeed real economic metrics.

Now, as frustrated as I am in not yet being fulfilled in my stat-wish, I am confident it ultimately will be, and soon enough. After all, once – not if, but once – the UK has developed its CBDC, it will be perfectly positioned for not merely a weekly release for CPI et al., but who knows, even one day (sic), a daily version.

Once we have seen the light of truly digitalising national statistics as it were, why stop there. There is absolutely no reason why the same technology that provides high frequency reliable data for inflation cannot be harnessed spatially.

After all, why should we assume that CPI is the same across the UK, when surely, we should let the data inform us if it is, or most likely, isn’t? One has to note here that going granular by time and space with inflation and other economic data will not add to “market volatility,” but rather add to its intelligence and as such, its performance.

Just think here of the nano-second diagnostics used in Formula 1 to improve driver and car performance. UK monetary management should, in short, race ahead with the use of price data et al., leaving the likes of Australia at the back of the grid which only last year advanced into monthly from its archaic quarterly CPI prints.

So, to summarise, there is nothing that can be levelled against an inflationary (sic) advance in the frequency and granularity of CPI which I would accept as being unwelcome for the more effective management of the UK economy.
 

Published by our friends at: