Hedge fund boss Odey fears 4 per cent inflation
INFLATION could hit 4 per cent in the next year, according to one of the City’s best known hedge fund bosses.
Crispin Odey, founder of Odey Asset Management, said in a newsletter to investors that he expected the next year to be a difficult one for the economy.
‘The balance of payments [in the UK] could show a 10 per cent current accounts deficit,’ he wrote.
‘Inflation could easily be 4 per cent,’ he said, adding that investment uncertainty ‘will take its toll’. He said pay growth will be minimal if inflation is below 4 per cent.
Odey, a prominent supporter of Brexit, boasted after what he called the ‘fantastic’ Leave result that he had made £220million on the collapse in the pound and shares in UK-focused companies. ‘I think I may be the winner,’ he said at the time. Overall, his European fund is down 34.9 per cent this year.
Official figures last week showed consumer price inflation stood at just 0.6 per cent in August.
However, the costs to industry measured by input prices were far higher at 7.6 per cent and many economists expect inflation to rise over the next year due to the collapse in the pound. Even so, Odey’s forecast is higher than most.
Consultancy Capital Economics said last week: ‘We think Consumer Prices Index inflation should break through the 2 per cent target in mid-2017 and near 3 per cent by the end of that year.’
Odey also urged US presidential candidate Donald Trump to ‘moderate’ some of his statements. He wrote: ‘He appeals to a lot of people who have the feeling that in the past 30 years their life has got much worse and they have not had any of the benefit of the glut of money.’