Monday, Feb 18, 2008
CPI forecast to be 1.5pc by summer 2009
The Telegraph: Wait a year before you panic about inflation
Roger Bootle see CPI hitting 2.8pc by Autumn 2008 and then falling to 1.5pc by summer 2009
Posted by sold 2 rent 1 @ 03:33 PM (3910 views) Add Comment
16 Comments
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1. sold 2 rent 1 said...
2. sold 2 rent 1 said...
Whilst I agree that the CPI is a con for "joe public", it doesn't stop the government using it to lower IRs more than should be allowed.
If Bootle's forecasts come off, the MPC can start making serious IR cuts by January of 2009, probably to less than 3.5pc, to beat the previous low.
House prices may be down 5-10pc by then too, so the pressure for reflation of the housing market with NR still on the government books will be masive.
Will spring/summer 2009 be the dead cat bounce (Elliott wave b in the a-b-c downleg) in this HPC?
Techieman?????????
3. paul said...
And what of RPI inflation? That old, outdated, socially inconvenient measure of inflation ... ?
4. hpwatcher said...
If CPI was ignored by everyone, the government would probably cease to use it.
5. hpwatcher said...
''Will spring/summer 2009 be the dead cat bounce (Elliott wave b in the a-b-c downleg) in this HPC?''
I don't know why you keep on banging on about the ''Eliot wave''. If no-one can correctly identify it's effects and make resasonable predictions about what will happen - other than in retrospect - then it's pretty useless!
6. happyrenterz said...
This cat ain't dead yet!
7. techieman said...
hpwatcher - calm down! - The point is it CAN be used to make reasonable predictions - although the basis of those predictions is with "degrees" [couldnt resist that s2r1] of probablilty. So with high probablilty we will fall in an a-b-c (which yes i have kept banging on about). What form that takes, how long it will take, and what percentage it will erode of the prior upmove are the variables. Alternatively we could just fall in one large lump (dont think that myself). In any case the determinations are based on dynamic price movements. hpwatcher, this can be applied on daily , weekly or monthly charts. One of the problems - as has been illustrated here recently is the determinants of the charts themselves. For example we know that a barrell of Brent crude is homogeneous but neither the measures of HPs are consistent and the product itself is hardly homogeneous. In other words the predictions are to some extent limited by the data.
Ok at some stage I will stick my neck out and give some downside targets, but not today (ive said 40% before though and stand by that - for now) !! The interesting point is are we merely at the top of the third (with a 4th retracement then a 5th) or have we hit the top. Before i came on this site i thought the former, but having read peoples views and reading a bit around the subject my view has changed, and i think we have hit the top for the complete cycle.
8. symo said...
Yes and we can all eat iPods instead of wheat can't we.
9. sold 2 rent 1 said...
paul,
I agree with the CPI/RPI scam the government uses to fix IRs
All I am saying is that they will continue to use this con to delay the bursting of the bubble.
hpwatcher,
No need to be agressive.
Think of Elliott waves in their most simple description. Markets don't go up or down in a straight line.
Fred Harrison saw this in his Boom and Bust book with the final stage of the boom called the "winner's curse" (2006-2007)
It is unlikely that the housing market will crash in a straight line.
There is too much scope and willingness for governments to lower IRs.
Many guys on here are frustrated because they haven't got the HPC they have been willing for, for 5 years.
This is a 60 year bubble bursting, and bubbles of this size don't burst easily, especially with governments all working together to keep them inflated.
I suggest that you lower your expectations and don't expect the crash to be in a straight line.
Despite the frustations, I think 2008 will be a happier time for most of us, as opposed to after the crash in 2010-2011, where economic hardship and unemployment will replace economic frustration for many.
10. enuii said...
Why is everyone so hung up on interest rates with regard to house prices. Will cutting 1.5 percent off current rates make them affordable or sustainable at even current levels. If we are entering a recessionary phase house prices will fall or stagnate, in a consumer/service based economy built on ever increasing house prices and long term property secured debt this means big job losses.
The key is maintaining the value of sterling and balancing the other two factors i.e. interest rates and inflation, unfortunately even for accomplished tightrope walkers this becomes more difficult as the rope gets longer!
One sudden move or unexpected event and the UK will loose its balance and fall off.
11. yoyo1 said...
If the government intends to stall the HPC they will conceivably extend the period for MANY to sell high.
12. Last_days_of_disco said...
Who are they going to sell to? Other suckers who are going to get it in the shorts. That is why FTBs are holding onto their cash. They are not going to be left holding the baby, the game is up.
13. hpwatcher said...
''No need to be agressive. Think of Elliott waves in their most simple description. Markets don't go up or down in a straight line.''
Oh sorry, I don't mean to be aggressive. The problem with the elliott wave there is a lot of interpretation as to exactly how the model fits with what has happened..only easy and possible after the event.
14. crash bandicoot said...
The government can only hide behind the CPI figure for so long. Sooner or later people will just not be able to afford to buy as much. There is a certain feelgood factor in being told that your pay is keeping up with inflation but this is erroded by having to use your credit card to maintian your standard of living. In the current climate I expect that the card issuers will be less likely to allow tens of thousands of pounds worth of unsecured debt to build up. I do however expect the CPI figure to come falling down in 2009 - there is an election in that year after all. The only question is how many people will believe it (or Gordon) then anyway
15. Fed Up said...
Roger Bootle's article should be retitled 'Wait a year until I've sold my house'!
16. Shina Willson said...
How can we forecast a rise in CPI, what factors influence CPI to increase?