Inflation: The real meaning of zero

EDITOR'S BLOG: Prices aren't going up at all in the UK at the moment. But zero has its good and bad sides, says Matthew Gwyther.

by Matthew Gwyther
Last Updated: 31 Mar 2015

Inflation is down to zero in the UK. So, we appear to be living in a world of zip and zilch. But not niente. But is zero a good or a bad thing? The public may be thrilled that inflation has, for the time being, ceased to exist, but if you believe that stuff is going to cost less next week then you are disinclined to buy it now and that’s not very good for our economy.

However, the great British consumer doesn’t seem to think like this. We still want stuff now. Consumer credit is on the up again and there aren’t many people who delay a weekly trip to the supermarket or don’t fill their cars with fuel (food and transport being the biggest contributors to falling inflation) because they think prices might fall next month.

Zero is a fascinating concept for all sorts of reasons. The first thing to say is zero isn’t nothing. Any Mathematician will tell you this. (So being semi-numerate I  naturally didn’t grasp this at all.) It has ‘a value’ apparently.  King Lear may have said to his daughter Cordelia that ‘nothing will come of nothing,’ but something will, and usually does, come of zero.

There is mileage in zero. Politicians will try to spin prices being static as a result of their efforts, but how much the current government had to do with bringing prices rises down to nothing is highly debatable. It’s all a bit global. (And when the numbers go below zero it really is brown trouser time, as any Japanese will tell you. Deflation stinks almost as much as growing up in the 1970s, as I did, when my 40p a week pocket money didn’t go very far with inflation raging at 27%.)

Zero has a noble and fascinating history and we didn’t catch onto it in the West until long after the Arabs. It’s also one of those numbers that is a little bit odd, mystical even. You probably ended up being branded a witch and placed on the ducking stool if you put a zero into your Maths homework during the Dark Ages.

We have a tricky relationship with zero in 2015. Zero hours contracts are a vile exploitation according to trade unionists but a big hit with business, especially retail. Most people agree size zero and the fashion models who strive to achieve it by living on Marlboro and espresso are a bad thing. But many of those models still stalk the catwalks and there is an increasing movement against 'skinny-shaming' thin women (see also: 'fat-shaming').

A zero sum game can be taken either way. In these there will always be winners as well as losers. The cool hard left Greek finance minister in the leather jacket is a game theory maestro. But the Bild Zeitung-reading Germans are convinced if they let the Greeks off some of their debts, the fall guy Germans will have to cough up the same amount to pay for such moral laxity. (The economics of it might be subtler than that.)

Talking of hero to zero… if Ed Miliband thinks he can go into the election on a cost of living crisis ticket then today’s news might be an inconvenient truth. Except that the cost of living debate is more state of mind than hard numbers. Few besides the mega rich feel they are rolling in it at the moment. Especially those unfortunates unable to buy their own home. The housing market doesn’t understand zero or moderation in the UK. All it gets is mindless boom or dire bust. And we’re much the poorer for it.

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Economy

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