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Inflation Falls

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http://news.bbc.co.uk/1/hi/business/8102231.stm

UK annual inflation slowed again in May as the Consumer Prices Index (CPI) fell to 2.2% from 2.3% in April, the Office for National Statistics (ONS) said.

The small decline means the figure remains above the Bank of England's target of 2%.

The annual inflation reading was the lowest since January 2008.

Another inflation measure, the Retail Prices Index (RPI) - which includes mortgage interest payments and housing costs moved to -1.1% from -1.2%.

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Guest DissipatedYouthIsValuable

But what about the tractor production?

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A further large downward pressure came from housing and household services. The effect came principally from electricity bills where tariffs fell this year but were unchanged a year ago. There were also downward pressures from heating oil and private rented property.
http://www.statistics.gov.uk/cci/nugget.asp?ID=19

I suppose rents must be falling fast, in the private sector

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Everything revolves around the price of oil. If that goes up so does transports costs etc.

This time last year Oil was heading towards $147 a barrel in July. In the coming winter inflation will go back up because that time last year oil was $30 a barrel but it will be much higher....

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I guess rates will stay low for a while longer?

BBC says the fall was "much lower than analysts expected"

CPI above target YET AGAIN.

Rates must rise soon, and a lot, all this QE and borrowing is casuing infkationary pressure (in a shock move...) <_<

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Are housing costs included in this figure? I did not think they were!!

I think rents are falling because of supply and maybe competition, it's on the statistics website.

The effect came principally from electricity bills where tariffs fell this year but were unchanged a year ago. There were also downward pressures from heating oil and private rented property.

http://www.statistics.gov.uk/cci/nugget.asp?ID=19

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Are housing costs included in this figure? I did not think they were!!

They are included in the RPI figure which is -1.1%

I personally added to deflation yesterday by negotiating a 6% reduction in my rent.

Could probably have asked for more but didn't want to push my luck as it's a nice place.

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The falls were not as much as consensus. For example, CPI MOM was 0.6% compared to expected 0.3%

yes, selective posting by the OP....he posted the article and omitted the last line

The fall in the CPI figure was much less than analysts had predicted

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The falls were not as much as consensus. For example, CPI MOM was 0.6% compared to expected 0.3%

ouch! 0.6% MOM is 7.44% annualised. How long can this go on? Mortgage rates on the up soon too, RPI can only really go one way.

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Good old Gordon is going to regret getting lcd tellys in the basket as China/Japan ease up production likewise for cappucino coffee.

LOLZ

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Just shows that Blanchflowers so called reading of the recession may have been correct but if the BoE had followed his plans where would CPI be now?

Massive

This can only mean one thing CPI is not going to drop to 1% by year end, BoE will have to start raising rates soon

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This isn't looking good for the "we need to fight deflation" excuse.

CPI (the official measure of inflation that we have been following in the previous years, however flawed) is still above target.

Right now they had expected to see strong downward pressure on deflation due to the effects of the oil price bubble last summer working out of the YoY stats. Instead, we have another oil bubble in progress. Oh dear......

Well, only one thing to do in the face of stubborn inflation. Keep interest rates low and print money! Isn't it obvious? :lol:

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ouch! 0.6% MOM is 7.44% annualised. How long can this go on? Mortgage rates on the up soon too, RPI can only really go one way.

I think it may be seasonal (but that would've been taken into account by the people polled for estimates). Last May was also 0.6

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Just shows that Blanchflowers so called reading of the recession may have been correct but if the BoE had followed his plans where would CPI be now?

Massive

This can only mean one thing CPI is not going to drop to 1% by year end, BoE will have to start raising rates soon

Lets see....

Jonathan Loynes, European and UK economist at Capital Economics, said: "We still think that core inflation will fall sharply over the next year or so in response to the general weakness of demand and opening up of a large amount of spare capacity. We still see scope for inflation to drop a fair bit further – to 1 per cent or less - by the late summer."

And the threat of deflation receeding is seen as a positive....

Sterling jumped by 0.6 per cent against the dollar to $1.6414 after the figures were released, and rose to the highest level this year against the Euro, which fell to 84.44 pence against the pound.

http://business.timesonline.co.uk/tol/busi...icle6509252.ece

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Everything revolves around the price of oil. If that goes up so does transports costs etc.

This time last year Oil was heading towards $147 a barrel in July. In the coming winter inflation will go back up because that time last year oil was $30 a barrel but it will be much higher....

Im afraid you are wrong. Crude oil is currently on a dead cat bounce as well, just like property. There is no justification for it to be $70 a barrel apart from the fact traders are bigging it up. Looking at supply and demand expect it to plummet again in the coming months. Possibly as low as $30 a barrel. Traders are simply speculating on these "green shoots of recovereh". Unfortunately oil and gas traders are no different to other commodity or share traders. If they actually understood the oil and gas industry oil and gas price wouldnt be quite so volatile. The traders seem to neglect looking at the simple facts (supply and demand) - much like many of our own pwoperdee experts and bulls

Once we are past November time, the highs of $140 a barrel are going to be out of the annual CPI/RPI figure so even if it does plummet back to $30, inflation will be slowly increasing again. Once we are past december the cut in VAT will no longer be in the RPI figures so expect that to push inflation up to.

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The falls were not as much as consensus. For example, CPI MOM was 0.6% compared to expected 0.3%

So I guess that leaves the CPI inflation adjusted Nationwide HPI for May at 0.6% (down from 1.2%), and the Halifax HPI at 2.0% (down from 2.6%). Or are they already inflation adjusted?

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Rates have not fallen.

2.2% inflation is still inflation, it just means that it is slightly less than it was last time, and is still above the boe's target.

Real inflation has been in double figures for some time now.

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Hey, this is significant - all the media pundits and 'analysts' were saying infllation would either fall below or hit the 2% target. Instead, it's remained flat.

Stupid twonks!

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Im afraid you are wrong. Crude oil is currently on a dead cat bounce as well, just like property. There is no justification for it to be $70 a barrel apart from the fact traders are bigging it up. Looking at supply and demand expect it to plummet again in the coming months. Possibly as low as $30 a barrel. Traders are simply speculating on these "green shoots of recovereh". Unfortunately oil and gas traders are no different to other commodity or share traders. If they actually understood the oil and gas industry oil and gas price wouldnt be quite so volatile. The traders seem to neglect looking at the simple facts (supply and demand) - much like many of our own pwoperdee experts and bulls

Once we are past November time, the highs of $140 a barrel are going to be out of the annual CPI/RPI figure so even if it does plummet back to $30, inflation will be slowly increasing again. Once we are past december the cut in VAT will no longer be in the RPI figures so expect that to push inflation up to.

Not sure it is a dead cat bounce. Investors are hedging against inflation and QE is leading to a commodities bubble. Nasty mixture.

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Not sure it is a dead cat bounce. Investors are hedging against inflation and QE is leading to a commodities bubble. Nasty mixture.

Personally think...long term 80-90$ Oil is going to be the norm for a while.. Sure they are brown shoots at the moment. Once growth does return , and the countries hurting from not getting their oil revenues open the taps again....then a period of stabilization will occur ( imho)

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