MacroScope

Rip-off Britain on the line

For all the talk about imported inflation in the UK as policymakers talk down the pound and financial markets merrily give it a good beating, here’s a stark reminder that a lot of British inflation remains home-grown.

British inflation has been so sticky over the past decade that regular Bank of England pronouncements that it will come back down from wherever it is to the 2 percent target at the 2-year horizon has become something of a policy piñata in financial markets. And there is rampant speculation the government will soon modify that inflation target.

But it’s no joke to British consumers, whose wages have stagnated for years and with a plunging currency in their pocket that is down more than 8 percent so far this year. They’ve been much more frugal with their spending, and as a result the economy is on its back.

Alan Clarke, UK economist at Scotiabank, drew up this simple chart, which shows UK consumer price inflation in the communications and transport sector along with the equivalent measure across the English channel in France. The blue line is Britain, the red line is France.

You get the idea: these lines should be roughly similar. It’s only a narrow body of water between them. The two countries are so close that Britons living on the seaside in Kent, just 20 miles away from Calais, have been hit by roaming charges while their carrier thought they had skipped off to France.

Giving up on the middle class

With more dismal U.S. economic data emerging this week, one marketing consultant wealth manager is advising her financial industry clients colleagues to ignore the masses altogether and focus solely on the ultra rich.

In an article on wealthmanagement.com, April Rudin, CEO of The Rudin Group (which, for the record, says it only focuses on clients of high and higher net worth), describes a “new reality” in which many wealth managers are marketing themselves to people who “will in the future not be able to afford their products and services.”

In the wake of the financial crisis, middle class families in the U.S. are burdened by too much debt, the rising cost of health care, fewer jobs and the ever-increasing price tag on retirement.

Tokyo and Osaka: most expensive cities in the world

Perhaps largely to a surge in the yen, Tokyo is back as the most expensive city in the world, followed by Osaka which made a leap from last year when it ranked 11th in the cost of living survey by consultants Mercer.

Moscow falls to the third from the top, while New York jumps to the eighth from the 22th last year.

Lagos (32) and Abidjan (34) are more expensive than San Francisco (34) or Luxembourg (38) while Bratislava (30) and Algiers (40) come higher than Frankfurt (48) or Washington (66).