Tuesday, Feb 13, 2007
Inflation lowering???
BBC News: UK inflation 'expected to ease'
Economists are expecting Britain's inflation to have eased slightly in January, after a jump in the rate to an 11-year high in the previous month. CPI is expected to dip to 2.9% from 3%.
Posted by nearly30 @ 08:33 AM (179 views) Add Comment
14 Comments
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1. nearly30 said...
3% to 2.9% - talk about making good news out of nothing!!!
Got some maths geek stuff thanks to d'ohs contribution on another blog yesterday.
Not the strongest at maths - so correct me if i'm wrong:
@ 3% p.a. = Prices double in 23.5 years
@ 2.9% p.a. = Prices double in 24 years
6 months grace!!!
So with all talk of HPI running @ 9.9% - the average house in 2014 will be £400K!!!
Req = Dual Income of over £110K in 2014.
No inflation isn't too high - is it???
2. waitingfor hpc said...
i must be stupid - 12 months ago oil was circa $30 a barrel .... now it is circa $60 a barrel? Yet inflation has hardly moved and now dropping due to energy prices????????
surely oil would have to be $25 a barrel for this to have a truly negative effect??????
Please can one of my learned friends explain this for me??
3. geed said...
Rounded up your maths is sound. It appears the BoE's remit is a target of 2.9-3.0%, not 2.0%. If the CPI headed for 2.0% or even stayed at their target, they would lower IR's. Therefore they also appear to use different rules for increasing/decreasing inflation.
I really dont think Merv would care if he had to a right "that" letter. It would go along the lines of,
...well its not my fault all the others voted against my direction so the system you, Gordie, implemented is flawed. Anyway I've been making you look like you know what you are doing with the economy by keeping cheap money in the system.
Now then be nice to me or I'll bring this illusion of an economy crashing down with a few 0.5% hikes, now leave me alone to enjoy my 130K salary. Merv....
PS. As "real" inflation is somewhere above 10%, I expect a pay increase in the same order. Dont make me ask twice, Ta.
4. sovietuk said...
There seems to be an article nearly everyday about inflation 'easing off' from the BBC. Can anybody explain why people are cynical?
5. David20040_0 said...
Down inflation goes and with it the chance of a rate rise.
6. C'mon Correction said...
The BBC report CPI as 2.7% not 2.9%.
Why no mention of RPI at all. It was 4.4% in December, what is it now? This is far more important at this time of year with wage deals. Does anyone know?
7. rich said...
>> i must be stupid - 12 months ago oil was circa $30 a barrel .... now it is circa $60 a barrel?
I'm concerned that you might have suffered a head injury in 2004... since a barrel of crude hasn't cost $30 since late 2003 :o)
According to the Economist, the price of West Texas Intermediate has dropped 6% from the 8th Feb 2006 to the 8th Feb 2007:
http://www.economist.co.uk/markets/indicators/displaystory.cfm?story_id=8675177&CFID=1930525&CFTOKEN=895482
Interestingly that same page suggests "food" has gone up 14% in that same 12 months.
8. waitingfor hpc said...
>>I'm concerned that you might have suffered a head injury in 2004... since a barrel of crude hasn't cost $30 since late 2003 :o)
No rich just from data on the internet.
http://www.mises.org/story/1892
Real crude prices* January 1970 to July 2005
Now look at the last couple of years. Starting in 2003, crude prices climbed from $30 to around $45 by the end of 2004. Since the beginning of 2005, they have gained another 50%. This may be related to the second war in Iraq and the general political situation in the Middle East. But note that even after the recent run-up, a barrel of oil costs about the same as in mid-1982, when prices were going down.
9. waitingfor hpc said...
you are right but still in real terms not a drop as CPI never climber in 2004,2005.. did it?
10. Albertini Albertino said...
C'mon Correction:
The BBC story reports RPI dropping from 4.4% to 4.2%.
If this figure-fudging carries on, the British Gas story this week will send us into deflation.
11. paul said...
RPI is still around 4.3%.
There are still very strong inflationary pressures as everyone acknowledges. It's not difficult to imagine RPI continuing to rise on the back of increased housing costs - to think otherwise is kidding yourself.
12. enuii said...
That will be the January sales, Feb/Mar figures will be more revealing.
13. Mr Plumbase said...
Dont forget we need a benign economy for when Gordon takes over in the summer.
14. geed said...
"right "that" letter."....My spelling is proper...idiot :)