Tuesday, Apr 17, 2007
CPI up again
Office of National Statistics: CPI at record 3.1%
Looks like someone is going to be writing a letter.
Posted by richc @ 09:34 AM (124 views) Add Comment
25 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. harold said...
And yet we've got monkeys in the MPC like Blanchflower who consistently vote for lower IRs??!! It just beggars belief. It's not just a letter of apology that the King needs to write, it's a letter of resignation.
2. monty said...
Two letters are better than one. Merv should do the honourable thing.
3. Davros said...
Ho ho!
4. holding out said...
In fairness to Merv he is one of the relative Hawks within the MPC. If he goes who will succeed him Rachael Lomax the current deputy who is second only to Blanchflower in her desire to cut rates! The currency markets have been marking the £ up for a couple of weeks now and have shot up again in anticipation of an IR increase even though inflation has actually reduced the value of the currency. Where are you Soros? We could do with inflation + falling currency to make things more interesting.
5. Elpapasito said...
TRIGGER?
6. Sam said...
I thought they were saying we'd be back to 2.1% buy the end of june?
perhaps bliar will resign on the same day to bury the bad news of a .5% rise.
Although - My money is on a .25% rise.
7. p. o. o. r said...
How many of us bloggers would say that we are surprised at this - Interest rates surely have to go up now. I wonder if the MPC will still say that we will be back down nearer the 2 mark later in the year - Oil prices are increasing pushing fuel back up, this will mean that the utilitiy companies will again be increasing their prices later in the year. I hope the MPC do increase by 0.5 however I think it will just be 0.25. Then again in June and again a few months later. I'm looking forward to reading that letter!
8. The Baldman said...
Gordons mircale was built on unsound fundamentals-debt and house price rises. Its starting to unravel!
9. sold 2 rent 1 said...
I think Smithy from The Times said CPI would be 1.9 by July. What a plum.
It's food prices going up - as a result of rising soft commodity prices.
All this bio-fuel production in the future will push food prices even higher.
Inflation is taking off, the economy is booming with very little spare capacity, and the pound at an all time high.
If you had said 6-6.5% IR by early 2008, you would have been laughed at last week.
This is now a real possibility.
The real problem is when IR's peak and the pound tumbles - inflation will sky rocket.
10. Sitting Tight said...
The letter is out. Apparently its risen to this new height because of the price of oil and milk!!! What are they going to do about it? Well they are going to have a meeting in May to talk about it before making a decision on interest rates - nothing new there then!!! Interesting times.
11. C'mon Correction said...
The pound has been really strong lately and we've still got the highest inflation in 16 years. Sterling is near it's peak, after we hit top of rate cycle (whatever that may be !) it'll sink and we'll end up importing ever more inflation. Things are not looking good for both the economy and house prices !
Yet another rate rise in May for my savings; won't be long I'll earn enough interest every month to cover my stupidly low rent. Don't think I'll be buying for quite some time !
12. Richc said...
I can understand why Smith makes the 1.9 claim. The big rise in home energy costs from last year will fall out of the numbers later this year which should, in theory, bring the year-over-year figure down with it. If you annualize this month's increase in CPI, however, it comes out at 6%, and this is completely unaffected by home energy costs. It's also interesting to note that the price war envisioned for the gas companies has yet to materialize. Only four companies announced cuts, and no one has announced a price cut for almost 2 months now. Given that no one really cares what their home gas bill looks like during the middle of summer, the gas companies are going to be in no hurry to announce further cuts. I'd say that the gas price deflation is going to be much less significant than a lot of people (like the Bank of England) assumed.
13. george monsoon said...
Come on guys, these clowns are experts at boiling the frog. two .25% increases over consecutive months...
14. tyrellcorporation said...
Just prey the markets don't wobble prior to the rate setting meeting - they'll use that as an excuse to do nothing again!
15. Eddie_lomax said...
3.1% - who's been a naughty boy then?
Although the situation demands at least 0.5% I expect the usual tepid 0.25% will be doled out.
But don't worry folks, the wise men at the BBC announced in the news that this inflation is all due to oil prices which will be coming down in Summer. Odd really as I've been watching that scene for the last few years and I can say with certainty that there is no reason short of a recession that is going to cause that!
16. tyrellcorporation said...
IMHO they have to go for a 0.5% rise - 0.25% doesn't even register when people are making £2k a month in HPI.
17. Waitingfor Hpc said...
waste of time - like kids writing love letters to each other. as we all agree a cover up yet again. this is a travesty of economic icompetence on a massive scale. true inflation is much higher than 3.1 and they carry on like this.
i hope we can arrest these two like the enron managers when it all goes wrong!
18. waitingfor hpc said...
waste of time - like kids writing love letters to each other. as we all agree a cover up yet again. this is a travesty of economic icompetence on a massive scale. true inflation is much higher than 3.1 and they carry on like this.
i hope we can arrest these two like the enron managers when it all goes wrong!
19. Patience Required said...
the letters were so soft, by the sounds of it its inflation in 2 years time which is what matters, King says the inflation will drop significantly in the next few months, however, he doesn't mention that after the heavy falls in oil in the second half of last year, that oil has started to increase again this year, in fact up 25% since february.
i'm getting fed up with all this gradual policy - when will the bank accept that its there low interest rates which has made people borrow beyond the hilt? We only need one shock to the economy and the whole pack of cards will fall down.
20. Notaneconomicsguru said...
Well it seems to me that many people on here were spot on.
Personally, I thought that MPC had it under control & that they would be proven correct that inflation would drop back later in the year without pushing interest rates up further. Is it too much of a coincidence that steady Eddie recently went public with his confession that he over stimulated the economy in 2001/2/3? It seems likely that MPC knew there was a high likelihood this would happen.
Without having a sound grasp of the issues, my instinct leads me to have my doubts that increasing IR's by amounts even up to 1% or even 2% will have the desired effect on long term inflation because I sense we are entering a second phase of globalisation during which the price of goods inexorably rise. Interest rate rises in western economies will dampen domestic consumer demand, but the price of goods could still rise globally because increasing affluence in the developing economies can take up the demand - they have huge populations of aspiring consumers. If this is true we are likely to return to a prolonged period of higher inflation and higher interest rates.
If that happened gradually it might not be quite so damaging. But then I recall that when in the aftermath of the £ exit from the ERM, it seemed to take quite a long time (maybe 12 months) for even the most astute commentators to realise and accept that we were then in a new era of low inflation. It took a while for people to feel comfortable that low IR's were an OK thing and set to stay for a good while. It seems quite likely that we have probably already entered into a new era in which higher inflation is the norm and that we are now going to have to get used to having long term IR's that are quite a bit higher than we have been accustomed to. Maybe my current 12 months 0% Credit Card is the last one I'll be able to get?
21. paul said...
"Let Hercules himself do what he may, the cat will mew and dog will have its day"
Hamlet Act 5 Scene 1, William Shakespeare
The MPC have failed and that's that. They have a blunt and effective instrument which they've sat on instead of using. How they can say that in the warmest spring on record, that fuel prices have anything to do with it is incredulous.
The papers will rip the MPC members to shreds - and rightly so.
22. speculatorone said...
Just listened to Tony Blair on radio 5.
I don't know why we are all getting worked up, he has just ignored all questions asked and told us all everything is fine?
Oh and crash grodon is and has done a great job?
Am I living in a different country?
23. denzil said...
Just goes to show the MPC do not have their eye on the ball.
I don't have a huge problem with King but I do have problem with the hand-picked bunch of stiffs that Gordon Brown has populated the MPC with. Blanchflower, what a complete irrelevance! How the hell is it possible to target inflation with that goon on the committee?
24. Dstars said...
waitingfor hpc said...
"waste of time - like kids writing love letters to each other. as we all agree a cover up yet again. this is a travesty of economic icompetence on a massive scale. true inflation is much higher than 3.1 and they carry on like this.
i hope we can arrest these two like the enron managers when it all goes wrong!"
Never truer words were spoken. Arrest them? Let's give 'em a golden handshake (whoops, no gold left).
We don't need no central banks; their function seems solely to provide easy profits (in the gap between their prognostications and reality) for the banks from which they were mostly extracted.
25. Shipbuilder said...
I reckon you're spot on, Notaneconomicsguru. I'm no expert, but I think I made the same point a while back - the Chinese et al. are now gagging for the consumer items we take for granted and are only just starting to buy - while costs there will still be tiny in comparison to us for a while yet, they're inevitably on the up from now on. Despite what some idiots say, common sense says that oil will never drop significantly again, even though you can practically guarantee the plundering of Antarctica by the US at some point. Without being too dramatic, I believe that we're in the endgame as far as many natural resources go - again prices can only rise - no doubt inflation will be recalibrated to suit the 'new paradigm'