Move To Include Cost Of Housing In Cpi

[The Masked Tulip]

http://www.ft.com/cms/s/0/35ca2dce-e78b-11df-b5b4-00144feab49a.html

The main measure of inflation targeted by the Bank of England may be changed to include housing costs, following fears that a failure to take proper account of soaring housing prices may have exacerbated the financial crisis.

Although rent is already included in the consumer price index the costs of owning a home are not, although they represent about 10 per cent of consumer spending. The Office for National Statistics views this as a big omission from the index.

[Timm]

This is an interesting topic, but to some extent, it's old news as it has been signposted some time ago and is not likely to take effect until 2012. That's pretty sensible IMHO, but if it gets adopted sooner and uses some sort of housing price measure, that would be pretty bearish.

Which is partly why I don't expect its adoption until after the current correction.

[Sledgehead]

Although rent is already included in the consumer price index the costs of owning a home are not, although they represent about 10 per cent of consumer spending

doubtless any inclusion will allow falling hpi to modify cpi downward, thus allowing boe extra low policy rates to be maintained even as the cost of living zooms. As soon as prices rise again, out will go the hpi contribution ....

[RufflesTheGuineaPig]

doubtless any inclusion will allow falling hpi to modify cpi downward, thus allowing boe extra low policy rates to be maintained even as the cost of living zooms. As soon as prices rise again, out will go the hpi contribution ....

Correct. It's an absolute disaster.

It's an excuse to keep rates low to try to keep house prices high.

[Cinzano Bianco]

doubtless any inclusion will allow falling hpi to modify cpi downward, thus allowing boe extra low policy rates to be maintained even as the cost of living zooms. As soon as prices rise again, out will go the hpi contribution ....

My thoughts exactly.

It's good to know I am not alone in my skepticism of all things governmental.

[Number79]

doubtless any inclusion will allow falling hpi to modify cpi downward, thus allowing boe extra low policy rates to be maintained even as the cost of living zooms. As soon as prices rise again, out will go the hpi contribution ....

this was my thinking also. Not good news at all.

[Timm]

doubtless any inclusion will allow falling hpi to modify cpi downward, thus allowing boe extra low policy rates to be maintained even as the cost of living zooms. As soon as prices rise again, out will go the hpi contribution ....

Correct. It's an absolute disaster.

It's an excuse to keep rates low to try to keep house prices high.

My thoughts exactly.

It's good to know I am not alone in my skepticism of all things governmental.

this was my thinking also. Not good news at all.

So when exactly do you lot expect this possible amendment to CPI to take effect?

[Number79]

So when exactly do you lot expect this possible amendment to CPI to take effect?

I would say sooner rather than later but doubt there will be any rush to do it before the end of the year.

[Timm]

I would say sooner rather than later but doubt there will be any rush to do it before the end of the year.

I'd agree with that.

But as per my previous post and link, I doubt there will be any rush to do it before the end of 2011 either.

[ingermany]

Just a smokescreen for inflation denial.

BoE has no credibility left.

They will make a reason to keep IRs at zero and print more money. The numbers and indices don't matter to them anyway. The current "CPI is high but we choose to ignore it", and the proposed "CP is low because we've subtracted 5% from the figure" makes no difference. BoE are in this to keep house prices high, and the rest doesn't matter to them.

[Giordano Bruno]

My thoughts exactly.

It's good to know I am not alone in my skepticism of all things governmental.

+1

[Democorruptcy]

I'm thinking of adding the following to my signature:

QE IS MAKING HOMES AND PENSIONS UNAFFORDABLE

What isn't it making more unaffordable? It's trashing the currency and we are a net importer.