And, indeed, wage growth has been, and remains, subdued (Chart 9). But other factors have conspired to push inflation well above the MPC’s 2% target. First, the substantial depreciation of sterling, though helpful to the necessary re-balancing of the UK economy, also simultaneously raised import prices. We initially underestimated how strong this impact would be, but we now think that the rise in import prices as a result of depreciation has added somewhere between 4¼% and 6½% to the level of consumer prices. Second, commodity prices – especially oil prices (Chart 10) – have been on something of a roller-coaster, rising sharply on the back of strong growth in the emerging economies up to mid-2008, then falling back sharply as global activity collapsed at the end of 2008. They have subsequently rebounded, reflecting both the recovery, especially in the emerging economies, and temporary adverse supply factors (bad weather affecting agricultural commodities; unrest in the Middle East and North Africa affecting oil). Finally, the increase in the standard rate of VAT has also boosted inflation. The blue swathe in Chart 11 shows our estimate of the combined contribution of these three factors, for a range of plausible assumptions, together with the actual inflation rate (the red line). The green swathe is the implied contribution from all other influences on inflation.
Earlier this year, I augmented these regional visits with a “Townhall Tour”, partnering with charities, citizen and faith groups to engage with new sets of people across the whole of the UK. These are, by design, listening events. The main messages are captured in my blog and animations and photos from each of the events. 49  The Townhalls have made clear to me the benefits of asking open questions, uncontaminated by priors and prejudices. They have taught me a lot about the economic and financial issues that really matter to people, only some of which are captured by economists’ theories and surveys. They have underlined for me the 47  Whittaker et al (2017), for example, found that patients were willing to wait longer for an appointment with a doctor with good listening skills. 48 Holmberg and Thelwall (2014). 49 Available from the Bank’s website at http://www.bankofengland.co.uk/Pages/outreachevents.aspx 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  benefits of harnessing non-expert opinion when it comes to understanding the economy. And the Townhall visits, while not making me a super-forecaster, have thereby hopefully made me a slightly less bad one. These Townhall visits are also an eye-opener for anyone in any doubt about the importance of the economy and economic policy to the everyday lives of most people. When someone tells you that a higher cost of living is, for them, the choice between heating and eating, it makes everyday economics real. It makes the MPC’s concerns about rising inflation concrete.