Tuesday, Sep 18, 2007
Inflation should be going up not down!!!
BBC: Australia slashes wheat forecast
Australia has slashed its official forecast for wheat production because of the ongoing drought.
The government said it expected farmers to grow 15.5m tons of wheat, a 30% reduction from its previous forecast.
Posted by tyrellcorporation @ 11:53 AM (609 views) Add Comment
13 Comments
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1. whiteknight said...
Our official inflation targets are in danger of becoming laughable on main street.
Move to the RPI effective next week for all BoE assessment activity.
Even though this figure is probably manipulated , it will shortly be less embarrassing than claiming inflation is falling as everybody is drowning under rising costs.
2. whiteknight said...
On the subject of inflation and fuel prices at the pump.
I believe there is 2p of tax to add on on October (deferred from Gordon "The Best Chancellor (but in fact by far the worst Chancellor) of All Times" Brown's April budget)?
Aswell as any price rise influenced by rising crude.
3. rickyb said...
I've always been under the impression that it is changes in past money supply that cause inflation, and not fluctuations in the price of various important commodities. Perhaps someone can clarify how increases in the price of wheat and oil can affect the average "basket of goods" if the amount of money we have to spend does not increase?
4. maddison said...
Exactly if prices go up too much people just stop buying and the price comes back down again. Only absolute essentials like food, energy, transport, can force inflation higher. A loaf of bread hardly has the impact that everyone goes on about. Lets see... I spend £4 a month on bread but £120 a month on petrol and that has actually come down this last month!
5. wage slave said...
It is my understanding that inflation is caused by an increase in money supply over and above the increase in GDP.
The CPI, RPI and RPIX are measures of inflation and are based on a basket of goods put together by the Office of National Statistics.
So you're right true inflation could be anything - but the public's perception of inflation is heavily influenced by the ONS figures. Which in this case is 1.8% a year apparently.
I don't know how quickly the money supply has been expanding but I think I have seen figures on hear suggesting 13% a year for a while now.
So if the CPI is to be beleived our GDP must be increasing by about 11% a year. Which I find hard to believe.
6. whiteknight said...
hmm.. good points.. hadn't thought of those ............
Here are a couple of unrelated questions i dont know the answer to and havent thought much about:
What happens if GBP drops by 20% against all the countries i import from? and i have a signficant trade imbalance?
What is the balance of capital investment flowing in and out of the country for investment purposes?
7. waitingfor hpc said...
this is an annual measure also - so petrol may have come down from last month BUT not from this time last year!
8. whiteknight said...
ah... Britain must be closed system
...... ah.. no wait..... umm....
9. whiteknight said...
well.. specific amount of GBP = prices must fall back because nobody else in the world has a demand for anything... uh.. no... thats ..
oh i give up....
10. cyril said...
The price of basic goods like wheat feed through into general inflation because this is the raw material at the bottom of the food chain.
Cereals are in practically everything we eat, and also what farm animals eat. So if you think it won't make any difference, I beg to differ.
11. wage slave said...
I've given up too.
12. tyrellcorporation said...
I've just had an 8% increase on my (basic) haircut! 1.8% my ars*!
13. rickyb said...
My feeling is that the true price inflation that most of us are currently experiencing is around 2% above the RPI inflation figure (i.e. over 6%). The question is whether the increases in prices of basic commodities are the cause of price inflation, or whether they are actually the effect of past monetary inflation.