Tuesday, Oct 16, 2007
It won't last
BBC: UK inflation rate stays at 1.8%
CPI remains at 1.8% and RPI drops to 3.9%
Posted by holding out @ 09:47 AM (2476 views) Add Comment
19 Comments
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1. Dae The Box said...
What a load of tosh!
How can RPI including mortgage interest payments go down, when mortgage payments are on the way up (end of fixed rates etc etc)???
2. tyrellcorporation said...
'The main upward pressure on the Consumer Prices Index (CPI) came from rising food prices, but these were offset by falling energy bills.'
Absolutely inspired move increasing the weighting of energy bills when they were at the peak of their inflationary cycle!
3. cornishman said...
Wait for house prices to be included once they start to fall...
4. Boarder said...
Was it the falling price of flying Pork?
5. planning4acrash said...
So, the fall in CPI has ended? I reckon it will be rising again before Christmas.
6. inbreda said...
I can't beleive in the guardian online business section they have the "Inflation steady" article, and immediately underneath the "oil hits record highs and likely to continue upwards" story, and absolutely no journalistic comment on the contradiction.
Madness
7. sold 2 rent 1 said...
Inflation will not take off in the UK.
The end result of this secular cycle is a deflationary slump.
The debt levels are way too high.
To expain, imagine CPI going over 3% and IRs were lifted to 6.5% the average Brit would be hammered on his/her debts and immediately pull back on spending.
They would ask for a pay rise but get refused because of massive immigration and offshoring of jobs. The economy will slip into recession and inflation will drop back, as any price rises in the shops will act like a tax, as real incomes fall further.
Deflation is a very difficult concept to grasp.
8. whiteknight said...
prices themselves dont necessarily fall back if the items are imports and in global demand.
this is not a closed system in the UK.
9. whiteknight said...
stagflation is the more likely scenario surely.
10. taffee said...
real rate of inflation is 4.8% 'cos they only include what they want
They used to include mortgages
11. mrmickey said...
Is it possible the US called the Turks murderers knowing they might invade Iraq in retaliation, this will push the price of oil up creating a demand for more Dollars and therefore stopping the collapse of the Dollar, just a theory.
12. C'mon Correction said...
I agree with Whiteknight, I can't see the UK falling into a deflation cycle anytime soon. Globally, inflation is the order of the day at present, UK imports more than it exports, any rate cuts and we'll start importing inflation. Over-immigration is not something that can happen indefinitely, indeed I think UK is past the limit. The Polish etc will soon be able to earn more after living costs, taxes etc back home than here in UK and live happier.
Deflation will only occur if we have a huge house price crash over 40%, until then deflation won't happen, I assume that's what s2r1 means? After a crash = deflation.
13. Ticktock said...
I agree whiteknight, Stagflation seems the likely outcome to me too.
14. d'oh said...
mrmickey - I had the same paranoid worry myself. Luckily, I wrapped my sandwiches in tinfoil this morning.
15. shipbuilder said...
I would say stagflation too - the credit crunch/crash will curb spending while we still have the problem of decreasing resources, importing inflation from China soon and a weakening currency. Can there be any other outcome?
16. david20040_0 said...
Errrrr how? When oil is nearly $90 a barrel?
17. sold 2 rent 1 said...
Deflation is the ultimate destination of the UK and the western world
How visible was deflation in Japan in 1989 and in the US in 1929. It wasn't
Money supply/new debt is increasing at 13% a year in the UK. Most of this new money/debt is going into assets. Very little is showing up in goods/services price rises (as yet).
Deflation happens when homeowners and businesses default on their loans and the money supply starts to contract. When the money supply contracts we have deflation in the making.
This is why governemnts are allowing money supply growth to rage ahead. The crux of the problem is that as long as this new money goes into assets the situation only gets worse and the end result more predictable.
The western governments only have 2 years or so left to start generating some serious price inflation (say > 50%) to erode the debt levels. By 2010 the default rate on loans will mean the money supply will start contracting - game over.
18. Northernlad said...
YET MORE *ULLSHIT FIGURES WE AS A NATION ARE EXPECTED TO BELIEVE!
19. mrmickey said...
sold 2 I think your spot on. The war on terror and the housing bubble have all been engineered to keep the money supply expanding, all built on debt of course, once the money supply contracts and deflation sets in were back in a situation where only a world war may get the money supply expanding again.