Friday, Feb 09, 2007
Will British Gas cuts affect the inflation figure?
This is Money: Gas cuts turn down heat on rates
Falling energy prices could pull inflation sharply lower in the coming months, reducing pressure on the Bank of England to hit households with further interest rate hikes.
Posted by webmaster @ 09:57 PM (151 views) Add Comment
8 Comments
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1. harold said...
The BoE don't really raise or lower rates in relation to the price of gas; they raise and lower rates in relation to the real arbiter of inflation, i.e., money supply (which is totally out of control) verses growth in goods and services. That is, money supply is outstripping goods and services leading to huge inflationary pressures in the economy (more cash chasing fewer good etc.). So far, inflation has been mainly located in housing, but it is being to bubble-up in other areas (excuse the pun). Falling gas prices may take the pressure off temporarily, but knowing the great British public they'll just use it as an excuse to spend more money on imported good, get further into debt and compound the problem. No, lower gas prices are not the cavalry marching over the hill (or should that be debt mountain?).
2. uncle chris said...
Rising gas prices didn't seem to have much of an impact on rates, so I can't see reducing them doing so. Not doubt its weighting on the CPI/RPI will miraculously increase to fudge the statistics - when did we all become so cynical about the government and establishment - I know, New Labour and its propensity to lie and deceive and lie again and be devious, oh and to lie some more.
3. enuii said...
The price of poultry will probably drop as well, Hooray for falling inflation I hear you all cheer.
4. geed said...
I hear cockles have come down in price during January, better lower IR's by a 0.5% then!
5. autopilotengage said...
Horrah, let's all get another BTL flat to celbrate.
6. Speculatorone said...
I wonder what all estate agents are thinking? Let's put another 10K on all properties for sale..........
7. paul said...
"it could shave up to 0.4% points off inflation"
Oh dear, the ghost of dodgy statistical reporting returns.
Did you know that up to a billion people will die of bird flu this week?
8. sovietuk said...
It seems to me that while sterling appears to be strong the pressure for big increases in interest rates in the short term is not that great (inflation figures being fiddled fo political purposes, BTLs owned by people in government and other people making decisions etc etc). However with very little to back the currency up it seems the situation is becoming increasingly more fragile and detached from reality. With the massive trade imbalances that exist in the world (unsustainable long term) together with major trouble brewing in the US economy and excessive global liquidity putting pressure on international base rates the longer term picture with respect to domestic base rates is very precarious indeed to put it mildly.