Tuesday, Dec 11, 2007
Yet the BoE CUTS rates!
Telegraph: Food prices rising at highest rate for 14 years
Yesterday the media reported factory output prices were high and rising. Today food prices are high and rising. So why is the CPI soooooo low then? I think it is about time pressure was put on the Government to review the use of the CPI as the measure of inflation used by the BoE.
Posted by talking rot @ 07:08 AM (651 views) Add Comment
10 Comments
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1. Growler said...
The measurement of CPI is now more or less aligned with how it is measured in the rest of Europe. If it were measured as it used to be, it would indeed be higher. But have no fear, recognised or not, house prices are on the way down - interest rate cut or not. I'm in the M25/M40 area and I've never had so many new house instructions being emailed to me. I can instantly name 10 houses already on the books for over 7 months, some with 10% drops and STILL not sold.
2. growler said...
But as ever, the UK papers don't look too hard at the reasons for this. Read the international version of an article in Spiegel magazine. http://www.spiegel.de/international/germany/0,1518,498423,00.html from way back in August 07. China is driving the world inflation, and as consumer demand grows into other areas, you'll see it in more areas. Right now, the Christmas tree is having a run as Chinese demand is driving these sky high - particularly the Nordmann Fir. Facit: UK Ltd is powerless to stop this type of inflation - expect more particularly in the Chinese perceived luxury goods market
3. handle_it said...
Damned if they do,damned if they don't. Clearly inflation isn't as important as we were lead to believe. People are really going to start noticing price increases over the next few months. Right now,and this is from comments I've made to others about food prices,I don't think the penny's dropped.Clearly wages will not increase to keep up with all the extra cost of food,energy and borrowing. Happy new year !
4. rickyb said...
Big increases in the UK money supply over the last 5 years are now starting to show up as price inflation. The Bank of England's targeting of CPI inflation is reacting to the symptoms rather than the cause - excessive money supply inflation.
5. Hpwatcher said...
The government [BOE] should be putting up rates....not lowering then. But ''they'' seem to think that this rise in inflation is only temporary and can be controlled...I just don't think so.
Recession is staring this country right in the face.....
6. paul said...
The inflation figures will be out later this week.
Lets see what they bring. The BofE's asset price targeting strategy (which previous governors have strongly warned against) will be exposed, while inflation is left to run ...
7. geed said...
What day are the inflation figures out?
Actually B0llocks to it, they are of little relevance anymore. We all know that the BoE are going to slyly inflate their way out of this, there goes my sterling savings up the spout again.
My precious.......my precious CPI.
8. Will said...
http://www.nsandi.com/press-room/press-releases/pr2004220.jsp
Oh, government backed, inflation-linked interest. They must have forgotten about this when they decided to inflate everyone's savings away?
Or perhaps, people just whinge rather than take responsibility for their own investments.
9. Denzil said...
geed said:
>>What day are the inflation figures out?
>>Actually B0llocks to it, they are of little relevance anymore.
The cloth that is the "CPI cap" is cut to fit the requirements that the MPC have for setting interest rates.
How on Earth the CPI can be close to 2% actually defies belief and commonsense.
10. paolo88888 said...
Will,
I notice that you article is from 2006. Rates have improved for savers no end since then! RPI is now 4.2%, and IL cert give you an extra 1.35% - equivalent to 9.25% for higher rate tax-payers.