Wednesday, Mar 07, 2007
Go back to old inflation measure
Indpendent: Bring back 'credible' inflation target, urges expert
A treasury manager from the Bank of Ireland has urged the Bank of England to revert a system of measuring inflation which is a better reflection of people's living costs. There is an increasing divergence between the consumer price index, currently at 2.7%, and the old system of the retail price index, currently at 4.2%.
Posted by jellycaster @ 08:49 AM (189 views) Add Comment
4 Comments
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1. Rickyb said...
I wonder if anyone else has listened to the Bank of England's Inflation report press conference for February. There were some interesting questions regarding CPI and house prices, including the suggestion that the ONS was looking in to the possibility of including housing prices in the CPI. Mervyn makes it clear that the ONS is responsible for this decision, but it would be interesting to see whether the inclusion of housing costs in the CPI coincides with a peak in house prices. Perhaps we could take this as a sign that the house price bubble is about to pop.
2. inbreda said...
Ummmmmm
but mr treasury manager from the bank of ireland, if the BoE used RPI it would mean that they would have to write a letter to the chancellor. And we all know they don't get paid enough for THAT level of work.
Has nobody told him it's a con?
3. tyrellcorporation said...
Yep, re-introducing house prices into general CPI when at the top of the house price hill will help keep CPI nice and low as house prices stagnate or fall. Inspired jiggery-pokery. It's a shame they un-hitched HPI from the inflation stats in the first place as we probably wouldn't be in this mess now.
4. paul said...
I'll tell you what's most interesting about this article - the throwaway comment at the end:
"Also giving evidence as part of the Treasury committee's inquiry into the first 10 years of the MPC, economists at BNP Paribas warned that the MPC's decision to downplay the role of the housing market had gone too far, increasing mortgage-laden households' vulnerability to shocks."
So, umm lets get this straight - this is an open acknowledgment that the MPC has been purposefully ignoring house price inflation to inflate the housing market?
Wow. That's dynamite if mainstream press choose to print it.