Saturday, May 19, 2007
Oh Dear - Prices are Rising so Inflation must be as well!
the Independent: Rising high-street prices prompt consumers to tighten their belts
While retailers try to rebuild margins by hiking prices consumers are reluctant to spend, could they be feeling the pinch as the economy starts to run out of confidence and mortgage equity steam.
Posted by enuii @ 08:57 PM (155 views) Add Comment
2 Comments
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1. Orwell said...
In its quarterly Inflation report this week, the Bank signalled that another rate rise, to 5.75 per cent, was needed to bring inflation back to its 2 per cent target. Some pundits have warned that borrowing costs might need to rise to 6 per cent or beyond.
mmmmmmmmmmmmmmmmmmmmmmmmmmmm 7.5% at least by next year. The figures? Mervyn's hunch that HP's were 50% overvalued in 2006, so IR's were 5.25% then , therefore 150% x 5.25% = c. 8% Am I right or am I right?
2. C'mon Correction said...
Increasing price inflation in this country isn't going to go away. Inflation and rates will be on upward curve until we hit a HPC and/or recession. Because Britain relies so heavily on imports and thus Globalisation - over the last ten years we have benefited greatly- low inflation causing low interest rates. Now Central Banks around the world are tightening, inflation is on the up. India and China have raised their rates several times over the last year, and look to continue. Only this week China has increased it's rates AND ley Yuan float a little more freely. Cheap import prices are coming to an end - fast, this is what will be reflected in the shops.
If / when Sterling drops (once we hit top of perceived rate setting cycle - about 5.75% it would seem currently)- oh dear. I can't see a way out?