My Comment on NotaYesman'sEconomics Post of 22 Jan 2021
I find Shaun Richard's blogposts on the economy invaluable, but also (at times) frustrating. He is well informed and keeps a close eye on the market and the operations of the Bank of England and other central banks. Furthermore, he reports and comments on these in such a way that the non-specialist can understand – or almost understand.
I believe his latest blog-piece (that of 2021-01-22) concludes that massive governmental injection of money in response to the COVID-19 pandemic is causing signs of inflation in the December figures for UK retail sales.
Retail sales may be up 2.9% this Decmber compared with 2019 (see below), but the official (CPI) measure of inflation is only up 0.65% on December 2019. It has been a funny old year. I am buying far more more books this year than last, but I am spending far less on petrol and air tickets. I do not think I have been influenced by government spending schemes. I would take with a cautious "pinch of salt" the conclusion that deficit-funded Government spending has caused appreciable monetary expansion, as yet. (But maybe I have missed Richard's point.)
&%&%&%&
I have attempted (below) a little light editing of Shaun Richard's post to illustrate my struggles with his text. Occasionally it is clear that there are redundant words, occasionally a misspelling; occasionally it seems that a word is missing and I have made a shot at guessing which word was in the writer's mind.
Notayesmanseconomist wrote:
So our story starts with what has been what one day will be cited in the economics text books as an example of (interventional?, expansionary?, bungling?, timid?, ) fiscal policy. That is our first link into the retail sales numbers as it creates a more positive foundation for retail sales numbers them than otherwise. The main interventional schemes are listed below.
§ COVID-19 Corporate Financing Facility
§ Coronavirus Job Retention Scheme (CJRS)
§ Self-employment Income Support Scheme (SEISS)
§ Eat Out to Help Out
§ miscellaneous subsidies paid out to businesses
Of these the first does not involve the public finances at this stage as the Bank of England has lent some £12.3 billion in the CFF. It may appear if there are losses on the scheme but as we stand we see simply some implicit support for retail sales (Or: Of these the first does not appear as a debt in the public finances at this stage, as the Bank of England has merely "lent" some £12.3 billion into the CFF. It may appear as a debt if the loan is not repaid; there are losses on the scheme but at present as we stand we see simply some implicit support for retail sales.).
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It is in the light of all of the above that we see retail sales volumes this. In December 2020, retail sales volumes increased by 0.3% when compared with November 2020, resulting in an increase of 2.7% when compared with February’s pre-lockdown level. So we saw growth in December which helped numbers to be higher than pre pandemic and in a more conventional metric higher than a year before.
The year-on-year growth rate in the volume of retail sales increased by 2.9% when compared with December 2019; non-store retailers reported the largest year-on-year growth at 43.5% while food stores also saw strong annual growth of 4.4%.
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Sadly the Office for National Statistics has turned its blind eye to this issue (of swings) and never published produced the research which was done; which leads me to conclude it favoured the Retail (over the Consumer?) Price Index. But the inflation issue is for another day except we to say that this is have an area where the Office of National Statisticsout official statistics office has a disappointing track record.
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