Tuesday, Jun 17, 2008
Inflation Rate Rises To 3.3%
Yahoo: Inflation Rate Rises To 3.3%
The official rate of inflation has jumped to 3.3% - its highest level since Labour came to power in 1997.
The figure for May was well above April's level of 3%, pushed up by high fuel and food prices.
Posted by crash n burn @ 09:56 AM (1362 views) Add Comment
19 Comments
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1. pelethar said...
The FTSE is flying - clearly they were expecting worse news.
2. jack c said...
"The FTSE is flying - clearly they were expecting worse news" not much chance of that with CPI (Contrived Price Index)
3. holding out said...
The RPI has only gone up by 0.1% Taken from the ONS website ( http://www.statistics.gov.uk/cci/nugget.asp?id=19):-
"Retail Prices Index (RPI) inflation rose to 4.3 per cent in May, up from 4.2 per cent in April. The main factors affecting the CPI also affected the RPI. Additionally, there was a large downward contribution from housing. The effect came mainly from mortgage interest payments as lenders passed on April’s quarter point decrease in the bank rate and, to a lesser extent, from house depreciation. Both mortgage interest payments and depreciation are excluded from the CPI."
Not only are lenders not passing on the interest rate cuts, they are raising their rates - so how can that statement possibly be true.
4. voiceofreason said...
Investments in housing have always been a speculative punt against inflation.
I have long thought that 5x and 6x earnings ratios for borrowing are not affordable.
Because over the long term, you just cannot trust that inflation and consequently IRs will stay low.
I mean, take this for example:
In year 2000 China had 4 million cars.
In 2005 - already 19 million cars.
It is expected that in 2010 the Chinese car fleet will be
55 million and 130 million in 2020.
And yet, oil supply is steady to falling. With this scenario, you would have to be naive in the extreme to expect inflation + IRs to stay low.
5. maddison said...
Hopefully the Americans will start using less fuel. They have 100m cars I reckon all doing about 25mpg
6. george monsoon said...
I have been prudent in that I have kept my bills and some of my shopping and pertrol receipts from last year.
To my calculations, since April 07, my cost of living has risen almost 30% so how the flying F**K can inflation only be 3.3% !!!!!!!!!
7. nopensionnohouse said...
Given that we hardly manufacture anything in this country anymore how the *king hell can we have the lowest inflation in the world?
Has anyone else heard of inflation being lower in any other country?
Oh, I forgot. Miracle economy. Right. I must be imagining all these price rises. Silly me.
8. Stevie Dee said...
@ comments 1 & 2 "The FTSE is flying - clearly they were expecting worse news".
Bless, if you wanted an illustration of how "out of touch" the supposed creme de la creme of the educated go-getters working in "The City" are, this is a perfect example.
I always thought that LSD had been superceeded by cocaine for these City Peeps & the nouveau riche, clearly, LSD is back in vogue or a cocktail of both.
9. converted lurker said...
George, that's where I'm at too. The one to watch IMHO was the index lastr week showing manufacturer costs increasing by 27%
10. The-letting-shop said...
I really can't see how the UK's inflation can only be 3.3%, I've worked out my business costs alone have risen at least 25% since the start of 2007.
We have a letting agents in Cardiff, Wales and used to deal in the sales but since the credit crunch we have just specialized in the letting
sector. The fuel prices are making it much harder for our agents too as they are constantly required to use their cars to take prospectives
on viewings.
The UN should get together and force the greedy Saudis to stop raising the price of their oil!!!
http://tls-uk.com
11. george monsoon said...
The general public is en-mass quite slow on the uptake, but eventually they will twig and it could be very nasty. Petrol prices could be the turning point. Civil war anyone?
12. still renting said...
@ holding out - "Not only are lenders not passing on the interest rate cuts, they are raising their rates - so how can that statement possibly be true."
The lenders are raising rates for new mortgage deals. This is what makes the headlines, but it only affects people remortgaging or taking out new mortgages this year. The large majority of existing mortgages are on fixed rates (which remain unchanged), or tracker and standard variable rates which have indeed fallen.
That's how that statement can be true.
I recommend you look into how inflation statistics are calculated, whether it's RPI, RPI-X, CPI, or any other measure. They are based on weighted baskets of goods and services, and will seldom reflect any individual's actual or perceived inflation level. People place a greater significance on changes in the price or bread, milk, petrol, etc. because these are the things that they buy every day. It is valid to include white goods, cars etc. because although the typical household only buy these things occasionally, they are expensive. If you buy a £900 TV every 7 years, that's still £10 / month on TVs. 2 loaves of bread a week is also about £10 / month. So is it unreasonable to include both in the index?
13. george monsoon said...
Still renting, thats a good argument, but I still do not agree that the basket of goods reflects an accurate picture of inflation.
If the government were to distribute inflationary figures that relate to the average household expenditure, this would be a more accurate and useful figure to work with. The ONLY reason we have CPI and RPI inflationary figures below 5% are becuase the measured items do not reflect the things that 99% of the population spend on. On that note, does anyone have a link to the complete list of CPI and RPI goods. I know this was posted earlier in the year.
14. still renting said...
http://www.statistics.gov.uk/articles/nojournal/cpi_basket_article_2008.pdf
15. notaneconomicsguru said...
10 StillRenting.
Do you think people really do buy a £900 TV every 7 years? Based on the number of plasmas & LCD's I see in people's houses, you could be right.
A silly personal point but all I know is I bought a £550 TV for £450 in 1991 which has a picture and sound quality I really like and has worked without a single fault for more than 17 years. My main reasons for not buying since are because I hated the change from black to silver 10 years ago, and then I feel there has been an overall reduction in picture and sound quality, with an unacceptable increase in physical size plus my old one just keeps on working.
16. george monsoon said...
The basket of goods.. -- which of these represents council Tax, Gas or elextricity, and why is communication a low? surely in today's age we spend a fortune on telephones, mobiles, internet, for essential services.!!
1 Food & non-alcoholic beverages 10.9 High 22
2 Alcohol & tobacco 4.2 Low 4
3 Clothing & footwear 6.3 Medium 11
4 Housing & household services 11.5 Medium 5
5 Furniture & household goods 6.7 Medium 11
6 Health 2.2 Low 3
7 Transport 15.2 High 6
8 Communication 2.3 Low 1
9 Recreation & culture 15.2 High 17
10 Education3 1.9 Low 1
11 Restaurants & hotels 13.7 Low 8
12 Miscellaneous goods & services
17. george monsoon said...
and where is mortgage? - credit cards, bank charges, life insurance etc..?
18. still renting said...
@ notaneconomicsguru
The TV was just an example. Actually I suspect that the 'average' household buys spends more than that on TVs, given that many households have more than 1. My point was that same argument can be applied to categories such as white goods, furniture, cars, etc.
@ george
As I suspect you know, CPI doesn't include mortgage costs. Neither does it include council tax. Gas and electricity come under household services. Mobile phones and internet under communications. It's all in the document.
I'm not arguing that CPI or any of the others is a perfect measure of inflation, or that it relates to your personal circumstances. But it is a useful metric for measuring inflation and, perhaps more importantly, changes in inflation.
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