Q2 2012 Inflation Nudges Oxford into the Lead

Inflation fell unexpectedly in the second quarter of 2012, with the CPI dropping to a 2.4% annual increase in June - its lowest level since November 2009.  Combined with rates of 3% in April and 2.8% in May, this meant an average inflation rate of 2.7% for the quarter.

This was much lower than many expected, and caught a lot of people out in our Clash of the Titans competition.  However, one person who got it completely right was Professor Muellbauer from Oxford, who generally predicted low rates of inflation throughout the year (and whose forecast for Q3 2012 is a further drop to 2.5%).  Both Professor Pesaran from Cambridge and Professor Quah from LSE thought inflaiton would be higher (3.1% and 3.8% respectively).  This helped nudge Oxford into a slender lead in our official competition.

There was also plenty of movement in our individual competition as well, although Siva Sabaratnam continues to lead the pack with a very impressive score (and is currently the only person doing better than Professor Muellbauer).  You can see the full individual rankings here.

The next key release is the preliminary second quarter GDP figure, available on the 25th June.  Oxford and Cambridge predicted a 0.4% and a 0.5% increase respectively, while LSE's Professor Quah forecast no growth.  After two consecutive quarters of negative growth, a modest increase is certainly possible and would be a welcome sign of the beginning of a recovery.  If there is a third quarter of decline though, LSE would make some progress towards closing the gap with Oxbridge.