Thursday, Mar 22, 2007
More conflicting reports
Guardian: Fresh fears over inflationary pressures
The prospect of higher interest rates loomed larger after a leading survey today showed that the number of manufacturers expecting to raise their prices hit the highest level in nearly 12 years, sparking fresh fears over inflationary pressures in the economy.
Posted by inbreda @ 04:45 PM (145 views) Add Comment
11 Comments
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1. holding out said...
We've got manufacturers! I thought we were a knowledge economy. Apparently according to the adverts we're also involved in the design of the Renault Clio. I think British engineering is responsible for the retractable beverage holders.
2. waitingfor hpc said...
yeah i am one - it's all going - sorry gone to China, France. Holland and Eastern Europe. And we have had rampant inflation in materials over 35% so far. our prices are going up 15% !!!
cpi is a farce
3. royston said...
Inflation news is coming in thick and fast. But can the greasy b@~#ds running the country wriggle fast enough to avoid having to increase interest rates?
4. dohousescrashinthewoods said...
So, what happens when you have rampant imported inflation and a global credit crunch deflation at the same time?
Do we end up going nowhere in the middle?
5. rich said...
Using the CPI confuses me, even using the RPI confuses me.
If I understand correctly what I seem to remember hearing somewhere, interest rates restrain or encourage economic growth by making cheap money available (or unavailable) to businesses to get ideas of the ground, and the more successful business growth there is the more inflationary pressure there is.
If this is true, surely consumer products are an irrelevent measure of inflation, because they indicate inflation up to the present at most, and certainly not future inflation. Surely it'd make more sense to follow asset prices, commodities, and labour markets, as increases in those prices effect future inflation.
6. enuii said...
I've increased my client fees by 22% in the last year and seen no fall off in business and may increase them again by another 10% this coming financial year and see if there are any adverse effects. I am probably making hay whilst the sun shines to cover myself for the coming rainstorm, if the storm doesn't come I'm quids in, if it does I can hunker down until it passes. I suspect others are doing the same as putting prices up is a good short term fix for falling profits if you have a 'safe' business. Add the two figures together and they almost match waitingforhpc's figures.
7. Tinecu said...
Here comes the tidal wave of inflation....
8. Tinecu said...
rich, Even better than asset prices, we should measue the gap between GDP growth and M4 growth as that will eventually be our inflation rate....currently around 11%!!
9. royston said...
Here is a frightening idea for anyone who has sold and moved to rental:- the imbalance between property prices and the rest of the economy could be corrected by a surge of inflation. Governments could permit this by looking at the 'wrong' measures of inflation (justified as being OK because all countries use the same wrong measure). Salaried employees, especially public servant, would loose out - but any individual would be no worse off than his/her peers. Governments could subsequently tackle the ill-effects of overall inflation by 'updating to more appropriate yardsticks', after all aspects of the economy had inflated to a similar level.
10. geed said...
"The Bank's monetary policy committee has already raised interest rates three times since last August to combat high inflation. The consumer price index for inflation hit a 15-year high of 3% in December. Despite falling to 2.8% last month it still remains well above the Bank's 2% target.
With figures today showing a marked rebound in retail sales in February, analysts said that the CBI survey reinforced beliefs that the MPC would raise rates by another quarter-point to 5.5%."
This data is a clear indication that 0.25% hikes do sweet FA! so what are they going to? Maybe, just maybe they may give us another 0.25% hike. Ineffective bunch or w@nkers!!!! Or an effective bunch of self serving w@nkers depending on which side of the fence you sit on.
Is ther any way of finding out how many properties all the members of the MPC have? and Gordon for that matter.
11. Shipbuilder said...
I think the inflation measure is being kept artificially low to meet the MPC's targets and avoid huge interest rate rises, but I don't think inflation high enough to inflate away mortgage debt can be disguised - higher prices eventually feed in somewhere.
Manufacturers need to keep shareholders happy - record profitable growth is expected every year or else.
Farmer's margins can only be cut so far.
China's and India's population will start consuming in earnest (and companies want to sell to them), so their wages can't be kept low forever.
Cheap immigration can only last so long before the cracks appear (arguably sooner in the country the population is leaving).
Japan and Germany both coming out of long term stagnation.
All the above factors add up to the fact that inflation simply cannot be avoided or disguised.
Interest rates will rise eventually, and if the US is the only one cutting, bye bye to the greenback.
But as I said, it will be covered up this year, just not long term.