We commented here in May 2022 on some specular forecasting failures, even by the Bank’s standards.
August 2020 “In the MPC’s central [inflation] projection, conditioned on prevailing market yields, CPI inflation is expected to be around 2% in two years’ time. [i.e. August 2022]”
August 2021 “… The MPC expects CPI inflation to rise temporarily to around 4% in the near term, before falling back towards 2%. … Inflation starts to decline in 2022, and returns to the 2% target in late 2023”
Hat tip to ‘The Courgette’ who has helpfully continued this sad story in an FT comment here.
November 2021 (CPI 5.1%, RPI 7.1%) “We expect inflation to rise to around 5% in the spring, but then fall back”
February 2022 (CPI 6.2%, RPI 8.2%) “We expect inflation to rise to around 7% in the spring, but then fall back”
March 2022 (CPI 7.0%, RPI 9.0%) “We expect inflation to rise to around 8% in spring 2022 and perhaps even higher later this year”.
May 2022 (CPI 9.1%, RPI 11.7%) “We expect inflation to rise to around 10% this year, and the economy to slow”
June 2022 (CPI 9.4%, RPI 11.8%) “CPI inflation is expected to be over 9% during the next few months and to rise to slightly above 11% in October”.
August 2022 (CPI 9.9%, RPI 12.3%) “In June, prices had risen by 9.4% compared to a year ago. That is well above our 2% target. We think those price rises will push inflation even higher over the next few months, to around 13%.”
September 2022 (CPI 10.1%, RPI 12.6%) “Given the Energy Price Guarantee, the peak in measured CPI inflation is now likely to be lower than projected in the August Report, at just under 11% in October. Nevertheless, energy bills will still go up and, combined with the indirect effects of higher energy costs, inflation is expected to remain above 10% over the following few months, before starting to fall back.”
November 2022 (CPI 10.7%, RPI 14%) “CPI inflation was 10.1% in September and is projected to pick up to around 11% in 2022 Q4, lower than was expected in August, reflecting the impact of the EPG. In the MPC’s central projection, CPI inflation starts to fall back from early next year as previous increases in energy prices drop out of the annual comparison.”
December 2022 (CPI 10.5%, RPI 14.0%) “Twelve-month CPI inflation fell from 11.1% in October to 10.7% in November. The November figure was slightly below expectations at the time of the November Report. CPI inflation is expected to continue to fall gradually over the first quarter of 2023, as earlier increases in energy and other goods prices drop out of the annual comparison.”
May 2023 “The BoE revised its short term inflation forecasts significantly higher as it admitted it had previously underestimated the strength and persistence of food price rises. Instead of inflation falling below its 2 per cent target within a year, as it previously forecast, the BoE now thinks it will hit the target only at the start of 2025, after the latest date of the next general election”.
If this record can be construed as in any sense positive, one has to wonder what failure would look like. It’s abysmal. However this article is reassuring. The Bank is “still” winning the fight against inflation. We were worried for a minute.
[UPDATE] The Sun says “MONKEYS could run the Bank of England better than its current bosses.” 😮