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Don't Expect A Rate Rise Soon

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Excellent, all those pensioners benefited from low Facebook and Twitter registration fees, and "buying" music from utorrent.

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we've seen the peak in inflation IMO - 4.4%

but that does't mean prices are going to come down. We'll still run ahead of target for a long time and everyone will get poorer in the meantime (just at a slightly slower rate).

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we've seen the peak in inflation IMO - 4.4%

but that does't mean prices are going to come down. We'll still run ahead of target for a long time and everyone will get poorer in the meantime (just at a slightly slower rate).

If you look at the price of fuel, it was high (though falling sharply) through May of last year, which lowers inflation this year, even through fuel prices are going through the roof now. After May, however, fuel prices will likely keep inflation "unexpectedly" higher.

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we've seen the peak in inflation IMO - 4.4%

I doubt it - the BBC pins this on a fall in food prices. There may be a blip that food is cheaper this March than last March, but I don't see a general trend of food getting cheaper: quite the reverse.

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http://www.forexfactory.com/calendar.php

CPI y on y

Previous 4.4

Expected 4.4

Actual 4.0

RPI y on y

Previous 5.5

Expected 5.5

Actual 5.3

Core CPI y on y

Previous 3.4

Expected 3.4

Actual 3.2

Pretty good news really. House prices are under pressure already and an IR rise would not be a good idea at the moment. It would probably be suicidal, need to wait on the euro zone in case of implosion. The boat was missed last summer; August looks likely for 0.25+ I think.

This combined with the very positive trade data to keep sterling down, inflation up eating away at the real level of debt whilst rebalancing. Can only see £ movements improving trade further for February and March.

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I doubt it - the BBC pins this on a fall in food prices. There may be a blip that food is cheaper this March than last March, but I don't see a general trend of food getting cheaper: quite the reverse.

its not cheaper than last march unless your wage has risen more than your cpi/rpi basket.

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I begin to suspect that rather than interest rates being used to control inflation the fear of a Bof E rate rise means that inflation figures are being massaged to indicate that a rate rise is not necessary.

I am beginning to come to the conclusion that there may have been some similar misrepresentation by bankers in the past too. ;)

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I begin to suspect that rather than interest rates being used to control inflation the fear of a Bof E rate rise means that inflation figures are being massaged to indicate that a rate rise is not necessary.

I am beginning to come to the conclusion that there may have been some similar misrepresentation by bankers in the past too. ;)

Probably moving goods in and out of the CPI basket to get whatever figure they like:

If you have a few hours / days spare to read the 100~pages

http://www.statistics.gov.uk/articles/nojournal/cpi-and-rpi-the-2011-basket-of-goods-and-services.pdf

So easy to manipulate it’s not funny, how the hell would anyone notice when the basket is sooo complicated.

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Rate rises? :lol: Too funny............

I got a .25% rise last week, now getting 1.55% on my EUR, which is a 55% increase in income compared to this time last year :D.

Just checked my French bank account and they're passing on and backdating the ECB rate increase to the 1st of march, conditional on the average balance until the end of the year being higher than the balance on 1/3/11. I shall pay some more in next month.

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I doubt it - the BBC pins this on a fall in food prices. There may be a blip that food is cheaper this March than last March, but I don't see a general trend of food getting cheaper: quite the reverse.

There was sharp rise from Feb to March last year, which has now fallen out of the comparison this month and a moderate fall from feb to March this year. Never trust one months data.

Inflation data is notoriously bad at taking pack size or quality reductions in to account and there are plenty of those at the moment.

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I saw an interesting analysis of it earlier on a good blog post which explained many of the issues around what happened in todays numbers.

Whilst the annual rate of inflation has dipped back from the height of 4.4% of last month to this months 4% it is important to remember that prices are still rising. On a month on month basis the CPI rose by 0.3% from February to March and its underlying index rose from 117.8 to 118.1.

As I look at the detail of the numbers I see this.

Fruit prices, overall, fell by 4.7 per cent, a record for a February to March period. Bread and cereal prices, overall, fell by 2.6 per cent, the largest ever monthly fall.

This reminds me of the recent report of the British Retail Consortium from last week as according to its Director.

The proportion of groceries going through the tills on promotion has reached a new all-time high of 40 per cent………..Over the shorter term, food was actually cheaper in March than February

I can personally vouch for the bread component as recently the price of a loaf has been discounted quite considerably by the supermarket that I visit although some of the promotions are now ending. If we step back for a second it becomes apparent if we combine the BRC report with today’s inflation figures is that discounting by shops and supermarkets has led to a fall in the annual rate of inflation in March. So the real question is how long can they keep this up?

Why did the RPI annual rate of inflation only fall by half the rate of CPI?

If you have inflation measures it is preferable if they tell you the same story. We have had the problem in the UK for quite some time as RPI has for a while indicated a higher inflation rate than CPI. This month the difference has got wider as it was 1.1% last month and is now 1.3% as the annual rate of inflation as measured by RPI has fallen by only half that of CPI.

Ironically house depreciation fell as an influence and as this cannot affect CPI as one of its flaws is that it does not allow for housing costs one initially might expect RPI to fall by more than CPI and not less! However food bread and cereal prices,which are this months strongest influence, have a higher weighting in the construction of CPI as do other downward influences such as air transport.

There is a more technical point also as the rising price of new cars affects RPI more than CPI. This is a consequence of CPI using hedonics and a geometric index which for the uninitiated means that such influences as rising car prices as less likely to influence CPI. Some might call it sleight of hand.

http://t.co/fkEvrQu

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I doubt it - the BBC pins this on a fall in food prices. There may be a blip that food is cheaper this March than last March, but I don't see a general trend of food getting cheaper: quite the reverse.

Easter was 4th April last year, so the pre-Easter food sales would have gone into the March data. Lots of overpriced chocolate etc.

Cheers,

Q

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This is purely based on my own personal opinion. My wife and I are on a good income with me full time and her part time bringing in around 80,000 pound per year. We are very keen savers and save more than 20.000 per year but we do like to buy "material things".

We very rarely buy things we want unless we find a bargain. For example recently bought a super king bed frame from M and S reduced fro, 750 to 250 pounds (cheaper than the single, double and king). Therefore the price of most things we buy appear to have heavily deflated. This is for non essentials only.

Food obviously is more expensive but we have started shopping in waitrose since a new store opened near us and petrol costs are going up.

The point is that for things that you buy on the high street which are non essential as more and more people cotton on to this great deflation the more prices will go down. The high street also has to compete with online discount vouchers and cashback.

I think all this talk about rising interest rates is a tad ridiculous. Maybe a token rise or two over the next few years but people will simply stop any non essential spending if rates go up. Savers won't start spending. Lets face it savers don't spend if they're anything like me they just hoard most of their cash until bargains come along.

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Ive just watched the BBC News and to quote the newsreader at the end of the show "the cost of living has gone down" despite inflation rising by 4% ..... so i tried inflating a balloon by 4% to see if it would go down and for some reason it didnt i must be doing something wrong .... and i thought the BBC were only the mouthpiece for the Labour party.

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Ive just watched the BBC News and to quote the newsreader at the end of the show "the cost of living has gone down" despite inflation rising by 4% ..... so i tried inflating a balloon by 4% to see if it would go down and for some reason it didnt i must be doing something wrong .... and i thought the BBC were only the mouthpiece for the Labour party.

No, they merely reflect and support the stupidity of the public at large, aka The Flock.

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It's interesting how the media are saying that with the CPI/RPI rate reducing that interest rates won't be going up next month. If the BoE waits long enough the ICB report will be being implemented and they'l have a double whammy of increase rates as well as increased banking charges to deal with. IMO rates aren't going to rise till next year at the earliest.

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its not cheaper than last march unless your wage has risen more than your cpi/rpi basket.

It's all basket case economics.

Reminds me of Lawson's fixation with 'shadowing the German Mark' all those years ago and not seeing the bigger picture. Interest rates going up over 15% really helped the economy no end, not. And no less stupid than 0%.

I can only think they are still hoping for another credit-fuelled boom.

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Prices as measured by RPI rose 0.5% on the month whereas CPI only recorded a rise of 0.3%. We might well see RPI inflation hit 6% during the summer months.

The formula effect – the difference between CPI and RPI due to the use of geometric rather than arithmetic averaging – has reached a new record of 1.03. Little wonder that the government is doing its best to remove RPI from the public consciousness.

FormulaEffect0311.gif

It’s a joke that the ONS is supposedly independent. Its monthly consumer prices release used to give as much prominence to RPI as CPI, but that’s no longer the case. As the Royal Statistical Society has pointed out:

"The UK appears to be unusual in giving this prominence to the CPI/HICP, and in renaming the HICP the CPI. Other comparable EU countries – for example France, Germany, Italy, Spain, the Netherlands – all publish a national index as their headline figure with the HICP published as an additional index. This mirrors UK pre-2003 practice with RPI and RPIX."

...so why does our 'independent' statistics agency feel the need to almost exclusively focus on this particular measure of price inflation?

Edit: for clarity

Edited by FreeTrader

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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