Inflation may be slipping but there is still plenty of misery ahead

Inflation may be a little lower than last month as the prices of petrol and diesel fall back, but it remains structural and long-term, says Merryn Somerset Webb. And there are no painless solutions.

People buying vegetables
Food prices have risen at the highest rate since 1995
(Image credit: © Getty Images)

Remember how last year we were told by every single self-important central banker in the West that inflation was nothing to worry about? It was, they said, mainly driven by short-term rises in energy prices and would be gone by 2022. Transitory, you see. Not structural at all.

Good news: they were right. Some of the inflation we have been seeing has been transitory and short-term. Bad news: they were totally wrong. Much more of it is structural and long-term. Look at the consumer price index (CPI) numbers out from the US and the UK this week and you will see the story in the detail. In the US, prices are up 8.3% in the year to July. That’s a little lower than last month, thanks to the fact that the transitory bits (oil and petrol) are falling back. But look to the rest and you can see that overall inflation is pretty broad-based.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.