Cover of MoneyWeek magazine issue no 483

Which threat do we face?

23 April 2010 / Issue 483

The big inflation debate...


  • Why Ladbrokes is worth a wager
  • A beginner's guide to buying foreign stocks
  • Cable for Chancellor? You must be joking


Will it be inflation or deflation?

It’s been a strange week. First, we had the inflation numbers. The consensus was that Consumer Price Inflation would come in at around 3%. It actually came in at 3.4%. RPI, used by unions looking for wage settlements and the like, came in at 4.4%. Still, while this might have come as a surprise to some, it certainly didn’t to Prosperity Capital’s Liam Halligan, a firm inflationist. “Producer price inflation is in double figures,” he said when I asked him about it. “What did you expect?”

On Wednesday came the unemployment statistics. The number of people counted as claiming benefits fell slightly. But underneath the irrelevant headline figure (remember, those with much in the way of savings can’t claim benefits), the news was all bad. Very bad.

The total number of people in employment during the three months to the end of February fell by nearly 90,000. The number of underemployed people (those looking for full-time work but only finding part-time jobs) rose to over a million. That’s the highest figure since comparable records began in 1992. None of this surprises Arbuthnot’s James Ferguson, a firm deflationist. “We’re in a classic post-banking-crisis recession,” he told me. “What did you expect?”

• Read the full editor’s letter here:
Will it be inflation or deflation?

• MoneyWeek subscribers: read the extended version of this week’s MoneyWeek Roundtable: here  Inflation or deflation – and what can you do either way? and join in the debate online.

Also in this week’s magazine:

• News: US regulator charges Wall Street titan with fraud
• News: Worry spreads as inflation ticks up
• News: Tesco delivers solid results
• Markets: Uncertainty haunts Wall Street
• Markets: What Argentina tells us about Greece
• Markets: Precious metals will buckle as demand sags
• Sector: Cash in on the US tech spending splurge
• Share tip of the week: Bookie with turnaround potential
• Turkey of the week: Overinflated silver producer
• Gamble of the week: Bargain cost-cutting resource
• Strategy: The best ways to invest abroad
• Personal view: Three unloved stocks to fall for
• Briefing: The fallout from Iceland
• City view: Vince Cable: the last person we need as chancellor
• Cover story: Inflation or deflation – and what can you do?
• Personal finance: Hang on to your second home
• Personal finance: Don’t get hit by the latest car taxes
• Personal finance: It pays to use online-only accounts
• Funds: Why you’re better off with a tracker
• Fund of the week: Following Buffett and finding income
• Entrepreneurs: Frances Dickens: Bartering my way to riches
• Profile: Lloyd Blankfein: genial chief of Goldman Sachs
• Travel: Where to stay in Copenhagen
• Toys: Alfa’s zesty hot hatch
• Last word: It’s a wartime election