Telegraph: Uk Inflation Falls Faster Than Expected In May

[Realistbear]

http://uk.finance.yahoo.com/news/uk-inflation-falls-faster-than-expected-in-may-tele-f9431f306f9e.html?x=0

UK inflation falls faster than expected in May

Reuters, 11:59, Tuesday 15 June 2010

British consumer price inflation fell slightly faster than expected in May, helped by lower food costs and boosting hopes that April's 17-month high marked a peak.

The Office for National Statistics said that the annual rate of CPI (NYSE: CPY - news) inflation fell to 3.4pc in May from 3.7pc in April, a somewhat bigger drop than the fall to 3.5pc forecast by economists.

"One thing that has been made clear for the post financial crisis world is that the prospect of inflating away the accumulated debt is not an option on anyone's table. Rather, I believe we are seeing a willingness to accede to deflationary forces that will allow the debt to be restructured, effectively reduced, at a point medium term out from where we are today. The plan will be to write down most of the debt which, set against a back drop of deflation, will cause less damage to the economy in the long term than allowing inflation to take its course."

I agree.

[Injin]

http://uk.finance.yahoo.com/news/uk-inflation-falls-faster-than-expected-in-may-tele-f9431f306f9e.html?x=0

UK inflation falls faster than expected in May

Reuters, 11:59, Tuesday 15 June 2010

British consumer price inflation fell slightly faster than expected in May, helped by lower food costs and boosting hopes that April's 17-month high marked a peak.

The Office for National Statistics said that the annual rate of CPI (NYSE: CPY - news) inflation fell to 3.4pc in May from 3.7pc in April, a somewhat bigger drop than the fall to 3.5pc forecast by economists.

"One thing that has been made clear for the post financial crisis world is that the prospect of inflating away the accumulated debt is not an option on anyone's table. Rather, I believe we are seeing a willingness to accede to deflationary forces that will allow the debt to be restructured, effectively reduced, at a point medium term out from where we are today. The plan will be to write down most of the debt which, set against a back drop of deflation, will cause less damage to the economy in the long term than allowing inflation to take its course."

I agree.

PRINTY PRINTY!

[the_duke_of_hazzard]

The RPI index went up at an annualised 4%, against 12% last month, and has risen every month since January.

Doesn't really sound like we're heading for deflation quite yet.

[the_duke_of_hazzard]

PRINTY PRINTY!

More like YAKKY YAKKY!

What exactly are they doing about inflation, other than talking about it?

[_w_]

"One thing that has been made clear for the post financial crisis world is that the prospect of inflating away the accumulated debt is not an option on anyone's table.

RPI +5% y/y

Never underestimate the power of denial.

[swissy_fit]

http://uk.finance.yahoo.com/news/uk-inflation-falls-faster-than-expected-in-may-tele-f9431f306f9e.html?x=0

UK inflation falls faster than expected in May

Reuters, 11:59, Tuesday 15 June 2010

British consumer price inflation fell slightly faster than expected in May, helped by lower food costs and boosting hopes that April's 17-month high marked a peak.

The Office for National Statistics said that the annual rate of CPI (NYSE: CPY - news) inflation fell to 3.4pc in May from 3.7pc in April, a somewhat bigger drop than the fall to 3.5pc forecast by economists.

"One thing that has been made clear for the post financial crisis world is that the prospect of inflating away the accumulated debt is not an option on anyone's table. Rather, I believe we are seeing a willingness to accede to deflationary forces that will allow the debt to be restructured, effectively reduced, at a point medium term out from where we are today. The plan will be to write down most of the debt which, set against a back drop of deflation, will cause less damage to the economy in the long term than allowing inflation to take its course."

I agree.

Reduction in inflation = deflation in your mind?

Not mine.

[Injin]

More like YAKKY YAKKY!

What exactly are they doing about deflation, other than talking about it?

Fixed.

[Realistbear]

RPI +5% y/y

Never underestimate the power of denial.

Indeed. The figures speak for themselves and I must admit, I was surprised to see a fall in inflation this soon.

" inflation fell to 3.4pc in May from 3.7pc in April, a somewhat bigger drop than the fall to 3.5pc forecast by economists."

Inflationists were probably expecting an increase in the level of inflation rather than a larger than expected decrease.

[Sour Mash]

Reduction in inflation = deflation in your mind?

Not mine.

It's the same logic that says that a deficit of 'only' £155bn is good because the predictions were that it would be £163bn and you're now £8bn better off ......

[Injin]

Indeed. The figures speak for themselves and I must admit, I was surprised to see a fall in inflation this soon.

" inflation fell to 3.4pc in May from 3.7pc in April, a somewhat bigger drop than the fall to 3.5pc forecast by economists."

Inflationists were probably expecting an increase in the level of inflation rather than a larger than expected decrease.

I agree, anyone who was expecting deflation must feel like a right moron with this sort of numbers comingout. As we all know the figures are heavily fiddled ans they still show inflation - lord knows what the real inflation rate is - must be north of 15%, easily.

And that's just price inflation - the money supply figures have exploded!

Printy printy!

[GordonBrownSpentMyFuture]

So this means I'll be able to afford to buy a house, yeah?

[DTMark]

More like YAKKY YAKKY!

What exactly are they doing about inflation, other than talking about it?

Causing it

[DTMark]

Deleted - duplicate. Damn those people streaming the football on their wretched smartphones mucking up my connection

Edited June 15, 2010 by DTMark

[babesagainstmachines]

You are Stuart Law's deflationist brother, and I claim my £5.

The monthly inflation figure was still above the BoE "target".

[_w_]

Indeed. The figures speak for themselves and I must admit, I was surprised to see a fall in inflation this soon.

" inflation fell to 3.4pc in May from 3.7pc in April, a somewhat bigger drop than the fall to 3.5pc forecast by economists."

Inflationists were probably expecting an increase in the level of inflation rather than a larger than expected decrease.

I don't think this month's variation is consequential, too small either way and probably within margins of error.

What I find striking is that in the context of a very high level of inflation the Telegraph should write something so opposed to the facts.

And expect to get away with it?

[Realistbear]

There are patterns in these things.

Think in terms of a linear graph.

E.g.:

Month 1 you have 5% inflation. Month 2 and its 4% all the way to, say, month 8 when its 0%. Month 9 and its -1%, month 27 and its minus 4%. It is true that in month 8 there was no deflation. But most would have seen it coming by then and sold off inflation hedges, gone to cash and bonds etc. Spot the trend and make money.

The key is spotting a trend. Just because the figures are still showing inflation does not mean that there is not a trend heading toward deflation. Its a slow process. Today's headline is that inflation fell more than expected. If it falls a few more times, more or less than expected we could end up in deflation territory. Deflation does, like sh*t, happen.

My advice to anyone who genuinely wants to see affordable housing is to embrace deflation, its your friend. Houses will become dirt cheap and savings/str/stm funds will be all the more valuable. Now, if you happen to be a gold bug deflation may become your enemy. Time will tell.

[Injin]

There are patterns in these things.

Think in terms of a linear graph.

E.g.:

Month 1 you have 5% inflation. Month 2 and its 4% all the way to, say, month 8 when its 0%. Month 9 and its -1%, month 27 and its minus 4%. It is true that in month 8 there was no deflation. But most would have seen it coming by then and sold off inflation hedges, gone to cash and bonds etc. Spot the trend and make money.

The key is spotting a trend. Just because the figures are still showing inflation does not mean that there is not a trend heading toward deflation. Its a slow process. Today's headline is that inflation fell more than expected. If it falls a few more times, more or less than expected we could end up in deflation territory. Deflation does, like sh*t, happen.

My advice to anyone who genuinely wants to see affordable housing is to embrace deflation, its your friend. Houses will become dirt cheap and savings/str/stm funds will be all the more valuable. Now, if you happen to be a gold bug deflation may become your enemy. Time will tell.

I agree, the overall trend is towards inevitable hyperinflation and one should bear that in mind when one hears talk of deflation.

it's alwso worth bearing in mind that deflation has never, ever occured before a full blown currency collapse and repudation.

[Sour Mash]

... My advice to anyone who genuinely wants to see affordable housing is to embrace deflation, its your friend. Houses will become dirt cheap and savings/str/stm funds will be all the more valuable. Now, if you happen to be a gold bug deflation may become your enemy. Time will tell.

What do you think happens to banks in a deflation?

Your savings may well turn out to be worth zero unless you get them out and hold them as cash - very tricky to do with large amounts of money as I have posted here in the past.

[the_duke_of_hazzard]

There are patterns in these things.

Think in terms of a linear graph.

E.g.:

Month 1 you have 5% inflation. Month 2 and its 4% all the way to, say, month 8 when its 0%. Month 9 and its -1%, month 27 and its minus 4%. It is true that in month 8 there was no deflation. But most would have seen it coming by then and sold off inflation hedges, gone to cash and bonds etc. Spot the trend and make money.

The key is spotting a trend. Just because the figures are still showing inflation does not mean that there is not a trend heading toward deflation. Its a slow process. Today's headline is that inflation fell more than expected. If it falls a few more times, more or less than expected we could end up in deflation territory. Deflation does, like sh*t, happen.

My advice to anyone who genuinely wants to see affordable housing is to embrace deflation, its your friend. Houses will become dirt cheap and savings/str/stm funds will be all the more valuable. Now, if you happen to be a gold bug deflation may become your enemy. Time will tell.

Thanks, I've never thought about things in terms of "trends". It sounds like a fascinating concept.

[_w_]

The key is spotting a trend.

What is the trend if not up?

[DTMark]

I agree, the overall trend is towards inevitable hyperinflation and one should bear that in mind when one hears talk of deflation.

it's alwso worth bearing in mind that deflation has never, ever occured before a full blown currency collapse and repudation.

If hyperinflation requires wage inflation to match prices to fuel itself, I can see a problem with that - wages are deflating.

I think I just see inflation - high in terms of essentials, medium in terms of discretionary purchases like electrical stuff, until enough people * have no money left for discretionary spending.

--

* The generation behind the baby boomers

[Injin]

If hyperinflation requires wage inflation to match prices to fuel itself, I can see a problem with that - wages are deflating.

I think I just see inflation - high in terms of essentials, medium in terms of discretionary purchases like electrical stuff, until enough people * have no money left for discretionary spending.

--

* The generation behind the baby boomers

Hyperinflation doesn't require wage nflation.

Inflation first, wages second.

[DTMark]

Hyperinflation doesn't require wage nflation.

Inflation first, wages second.

Does Zimbabwe have high wage inflation?

How about a scenario where people are eventually given state loans to be able to afford basics like food and shelter in the short term... then the medium term...

[Realistbear]

Thanks, I've never thought about things in terms of "trends". It sounds like a fascinating concept.

Exactly. You spotted a note of sarcasm in my post.

When a trend starts it usually begins slowly in the beginning before picking up speed and before you know it, what was once is no longer!

Little bit more deflationary news for the US today:

http://finance.yahoo.com/news/May-import-prices-post-rb-1207542797.html;_ylt=AtAViZZnqaDQkoHqpeJChhq7YWsA;_ylu=X3oDMTE1cjF0NGpsBHBvcwM0BHNlYwN0b3BTdG9yaWVzBHNsawNtYXlpbXBvcnRwcmk-?x=0&sec=topStories&pos=2&asset=&ccode=

May import prices post largest drop in 10 months

On Tuesday June 15, 2010, 8:53 am EDT

WASHINGTON (Reuters) -

Import prices recorded their largest decline in nearly a year

in May as petroleum costs plummeted, according to a government report on Tuesday that bolstered views of

tame inflation

and low interest rates.

Edited June 15, 2010 by Realistbear

[_w_]

Putting aside the idea that inflation figures may show that we are in a clear deflation trend, this graph in and of itself tells an interesting story.

We have a peak in August 08 that reflects $147 oil and the collapse of sterling end of 07.

How interesting that as sterling then rises against its biggest trading partner's currency and commodities stay low, we have as much inflation now as we did then? Where is the $147 oil? Where is sterling at 1 euro?

Or could it be... or very own how grown BOE that is doing this all by itself.

Dare I say p****y p****y?