A canary in a coal mine: non-tradeables inflation

Headline inflation has officially hit a 30-year high of 6.9%pa in March, but as predicted the devil is in the detail. If we look at the prices of goods that we trade (import/export) these rose by 8.5% from a year ago, while for goods and services that are not traded and so are not directly influenced by international factors, inflation was sitting at 6.0%pa. The sharp increase in non-tradeables inflation is what worries me – it is the piece of the puzzle which we can’t pin to global occurrences and is the canary in the coal mine for the inflationary mindset that is becoming engrained in business decision-making.

Keep calm and carry on is all I can say – let’s not get sensationalist with what is happening and too caught up in conjecture regarding how long the situation will persist. Believe it or not, some of the way forward lies with us and it is dangerous to solely blame global factors. Take baby steps now, be conservative in how you price and wage bargain if you can – individually these actions don’t make much difference, but collectively they can shift the dial!