UK Inflation Will Stay at 3% — Here’s Why the Market Is Wrong
UK inflation is falling while oil is up 35% and gilt yields are at an 18-year high. Neil Woodford explains why the 4-5% inflation forecasts are wrong again, what is actually in the CPI basket, and why the bond market may be pricing the wrong story.
The Telegraph says British inflation hits 4-5% by Christmas. The Bank of England, the City and the academic economists said the same thing in March, when oil was $120. July came in at 2.9%, food inflation at 1.3%. In this episode Jon Adair argues the inflation surge case as hard as he can and Neil Woodford takes it apart leg by leg: the energy shock and the price cap, food, second-round effects and wages, and the bond market.
Neil puts a number on December inflation and explains why most of it is already written. He covers why gas and electricity are 3% of the basket (half what they were in the 1980s), why 55% of the pump price is tax, why UK pay growth at a six-year low means there is no wage spiral, and why the gilt market is following US Treasury yields rather than a UK inflation problem. Then the bigger question: is this a new inflationary age, or the start of a period of disinflation driven by energy supply, China and AI? And if he's wrong, what happens.
More episodes
Britain’s Productivity Crisis: A Great Deception?
Is the UK's productivity crisis actually real? The ONS has quietly admitted its Labour Force Survey overstated UK employment, and the HMRC tax data tells a completely different story about the UK economy, your taxes and interest rates. In this episode, Neil Woodford explains what the tax records really show about UK productivity, why the official survey invented half a million workers who don't exist, and how one wrong number fed both the OBR forecast that drove Rachel Reeves' tax rises and the Bank of England's view of how fast the economy can grow before rates must stay high. We also get into the collapse in graduate jobs and what it says about AI adoption in the UK, whether Britain's productivity has genuinely accelerated since 2024, and how the UK really compares with the G7. Stay to the end for what a correction means for the November Budget, mortgage rates, gilts and rate-sensitive UK stocks, and where Neil sees the opportunity. Read Neil's full written analysis Neil's first piece on this from 2024
Show notesThe 7 Decisions Every Investor Faces (Part 1)
Neil Woodford has been answering questions about investing for 35 years – and every one of them comes down to seven decisions. In part one of this three-part series, Neil and Jon Adair cover the funnel: the three decisions that take you from every company in the world down to a shortlist worth owning.
Show notesOne Banking Rule Locked a Generation Out of Housing. What Happens When It Goes?
Mortgage payments as a share of take-home pay are close to their long-run average, buying costs less per month than renting the same home, and real house prices have been falling for five years. So why can’t young people buy?
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