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FTBagain

Inflation 2.5% Cpi

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Would you believe it of the three measures quoted, the only one to fall was the RPI, because the mortgage costs fell last month. Clever really, the banks have engineered some more breathing space for themselves.

On the plus side the RPIX measure is up as well, suggesting that non mortgage inflation is becoming entrenched. Slow old process though.

Edited by FTBagain

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What a joke.

Frustrating ain't it! With Sir John Gieve to join the MPC in the New Year it looks like we will have to wait a little longer for another rate hike. But it will come, sure as eggs is eggs, it will come. There have been some interesting facts emerging this week on global inflation. It is back and I think it will continue to accelerate. It just takes time, that is all.

Edited by FTBagain

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Would you believe it of the three measures quoted, the only one to fall was the RPI, because the mortgage costs fell last month. Clever really, the banks have engineered some more breathing space for themselves.

On the plus side the RPIX measure is up as well, suggesting that non mortgage inflation is becoming entrenched. Slow old process though.

However core inflation was unchanged against 0.3% in August, which suggests that the rise in headline CPI was almost purely energy related. The deflationary impact of high energy prices will be a concern for the BoE and means the chance of a rate cut in November or January has increased markedly. With arch hawk Large gone from the MPC the chance of a rate cut to boost growth has increased (as indicated by the fall in sterling against the dollar and the euro this morning).

Hopefully this, the Royal Institute for Chartered Surveyors reporting that they expect house prices to rise in the next 3 months and Rightmoves asking prices rising will put to bed all this talk of a house price crash, it ain't gonna happen, the slowdown is all you will see and as i said earlier this month we will see house prices rise again next year as interest rates are cut to 4.25% or 4.%.

Hopefully this weight of data will take the wind out of the arch bears in the forum hoping for a crash so they can get on the ladder and the economic turmoil that would bring. But somehow i doubt it!!

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However core inflation was unchanged against 0.3% in August, which suggests that the rise in headline CPI was almost purely energy related. The deflationary impact of high energy prices will be a concern for the BoE and means the chance of a rate cut in November or January has increased markedly. With arch hawk Large gone from the MPC the chance of a rate cut to boost growth has increased (as indicated by the fall in sterling against the dollar and the euro this morning).

Hopefully this, the Royal Institute for Chartered Surveyors reporting that they expect house prices to rise in the next 3 months and Rightmoves asking prices rising will put to bed all this talk of a house price crash, it ain't gonna happen, the slowdown is all you will see and as i said earlier this month we will see house prices rise again next year as interest rates are cut to 4.25% or 4.%.

Hopefully this weight of data will take the wind out of the arch bears in the forum hoping for a crash so they can get on the ladder and the economic turmoil that would bring. But somehow i doubt it!!

Don't wait up for manufacturing to revitalise the economy. When it is really needed it will have been destroyed - together with a significant proportion of the service economy by rampant inflation in housing, land, tax and other costs.

You obviously have a very short term outlook on life and prosperity.

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2.4560% actual figure.

I expect it to hold about here and then tend downwards as the big increases in energy (transport component) drop out of the figures.

I expect a rate cut soon. maybe november or jan/feb. sensible thing is to wait and see if we can muddle through. If the economy still growing at an annualised 1.5-1.8% growth rate in Feb next year then BoE should keep its hands off and let the economy rebalance and quit allowing consumer spending to be the only thing driving the economy forward.

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However core inflation was unchanged against 0.3% in August, which suggests that the rise in headline CPI was almost purely energy related.

Oh dear!

A quote from today's Telegraph article:

The Bank's hawkish wing - some old enough to remember the errors of the late 1960s - have misgivings about the concept of "core inflation" that strips out energy and food.
Prof Tim Congdon, Britain's leading monetarist, said it was folly to depend on the soothing message of "core inflation".

Looks like we're going to be making the same mistakes as we did in the 70s

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Frustrating ain't it! With Sir John Gieve to join the MPC in the New Year it looks like we will have to wait a little longer for another rate hike. But it will come, sure as eggs is eggs, it will come. There have been some interesting facts emerging this week on global inflation. It is back and I think it will continue to accelerate. It just takes time, that is all.

Actually core inflation in the US only rose 0.1% yesterday, below expectations for a rise of 0.2%, suggesting that core inflation is lower and that overall inflation is only driven by oil.

OnlyMe how is raising rates going to help out manufacturing. I can't quite understand how my outlook is more short-term than you hoping for a housing price crash which would drive the economy into recession so you can get on the ladder! Sorry for wanting to keep the economy growing, how silly i must be!!! :blink:

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2.4560% actual figure.

I expect it to hold about here and then tend downwards as the big increases in energy (transport component) drop out of the figures.

I expect a rate cut soon. maybe november or jan/feb. sensible thing is to wait and see if we can muddle through. If the economy still growing at an annualised 1.5-1.8% growth rate in Feb next year then BoE should keep its hands off and let the economy rebalance and quit allowing consumer spending to be the only thing driving the economy forward.

I agree, a debt addicted society can't afford a prudent monetry policy. They will inflate the debt away and blame it on oil. Politically, I can't see what else they can do.

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2.4560% actual figure.

I expect it to hold about here and then tend downwards as the big increases in energy (transport component) drop out of the figures.

I expect a rate cut soon. maybe november or jan/feb. sensible thing is to wait and see if we can muddle through. If the economy still growing at an annualised 1.5-1.8% growth rate in Feb next year then BoE should keep its hands off and let the economy rebalance and quit allowing consumer spending to be the only thing driving the economy forward.

I agree 100%, its good to see someone talking some sense on this forum. The rise in energy prices is deflationary to core inflation, its if it enters underlying prices that the bank gets concerned, and with retail spending slumping its more likely that prices are coming down to encourage spending rather than going up, especially ahead of Christmas. Expect sales in early December this year!!

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I agree 100%, its good to see someone talking some sense on this forum. The rise in energy prices is deflationary to core inflation, its if it enters underlying prices that the bank gets concerned, and with retail spending slumping its more likely that prices are coming down to encourage spending rather than going up, especially ahead of Christmas. Expect sales in early December this year!!

The trouble with core inflation is that it strips out energy and food. Have you ever tried stripping out energy and food?

Exactly - you can't. So for ordinary people inflation is rising.

It won't matter to most people if a DVD player costs £15 when they can't afford to put petrol in the car to go to work. Reducing interest rates will likely weaken our currency and cause energy prices to rise even more, but hey, don't worry that's deflationary to 'core inflation'.

This is similar to what happened in the late 60s when policy makers stripped out everything that was actually rising in price and concentrated on 'core inflation'.

But I agree with you - we will be lowering interest rates soon !!!

The one thing we learn from history is that we don't learn from history!

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The trouble with core inflation is that it strips out energy and food. Have you ever tried stripping out energy and food?

Exactly - you can't. So for ordinary people inflation is rising.

It won't matter to most people if a DVD player costs £15 when they can't afford to put petrol in the car to go to work. Reducing interest rates will likely weaken our currency and cause energy prices to rise even more, but hey, don't worry that's deflationary to 'core inflation'.

This is similar to what happened in the late 60s when policy makers stripped out everything that was actually rising in price and concentrated on 'core inflation'.

But I agree with you - we will be lowering interest rates soon !!!

The one thing we learn from history is that we don't learn from history!

I remember this Economist article - http://www.economist.com/finance/displayst...tory_id=4425575

A reminder of what happened in the 1970s when core CPI filtered out higher energy costs etc - that proved wrong on a grand scale as higher energy prices were there to stay but were ignored in monetary policy decisions/rates etc.

"In its statement this week the Fed stressed that core inflation—a measure that excludes energy and food prices—has remained relatively low, at only 2.1% over the past year. The core inflation rate was invented in the 1970s as a way to exclude the impact of temporary food and oil supply shocks, and so allow the Fed to focus on the underlying trend. The snag is that the current rise in oil prices looks much more permanent than previous spikes. Moreover—at least until Katrina came along—the rise in world oil prices has mainly reflected strong demand (partly due to robust growth in America) rather than a disruption of supply, and may therefore be a symptom of more general inflationary pressures.

Stephen Roach, the chief economist at Morgan Stanley, worked at the Fed in the 1970s under the then chairman, Arthur Burns. He remembers the dangers of core inflation. When oil prices surged in 1973-74, Burns asked the Fed's economists to strip out energy from the consumer-price index (CPI) to get a less distorted measure. When food prices then rose sharply, they stripped those out too—followed by used cars, children's toys, jewellery, housing and so on, until around half the CPI basket was excluded because it was supposedly “distorted” by exogenous forces. As a result, the Fed failed to spot the breadth of emerging inflationary pressures throughout the economy."

I get the feeling this time that oil volatility is again not a spike but the beginnings of a new floor in oil prices.

Edited by Tempest

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However core inflation was unchanged against 0.3% in August, which suggests that the rise in headline CPI was almost purely energy related. The deflationary impact of high energy prices will be a concern for the BoE and means the chance of a rate cut in November or January has increased markedly. With arch hawk Large gone from the MPC the chance of a rate cut to boost growth has increased (as indicated by the fall in sterling against the dollar and the euro this morning).

I'm not sure I entirely understand why the MPC is going to cut rates on the back of an inflation measure that is NOT its target falling while the inflation measure that IS its target continues to rise (and heading ever closer to that 3% threshold when Mervyn gets to write an open letter to Gordon to explain how he has fugged things up badly enough to be at least 1% out on the inflation target).

I have just been reading about how Rachel Lomax (deputy governor at the Bank and normally seen as relatively dovish) has been warning how the MPC cannot become complacent.

Apparently she has warned there is "no room for complacency" over "the INFLATION risks posed by near-record oil prices" and that the Bank needs to avoid kicking off stronger wage demands on the back of higher inflation expectations.

Her speech was seen as "a further blow to hopes for fresh cuts in interest rates".

Strange that she is not warning of the deflationary risks of high oil prices and promising further rate cuts, as you do. I can only assume you know better than her.

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The trouble with core inflation is that it strips out energy and food. Have you ever tried stripping out energy and food?

Exactly - you can't. So for ordinary people inflation is rising.

If oil prices do drop back to around $30 per barrel, and inflation falls sharply as a result, will you then be calling for interest rate cuts?

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"Hopefully this weight of data will take the wind out of the arch bears in the forum hoping for a crash so they can get on the ladder and the economic turmoil that would bring. But somehow i doubt it!!"

And the debt and misery created by high prices is marvellous isnt it?

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I get the feeling this time that oil volatility is again not a spike but the beginnings of a new floor in oil prices.

I think that oil prices are high because we are hitting the limits of production. Though we're probably close to the peak of oil production, I think that the bottle-neck at the moment is refinary capacity. So, if there is a reduction in demand from, say, a global recession, there is room for oil prices to fall. So this sort of price is, at the moment, only a floor with this sort of demand.

However, it is a sign of things to come as we move to the top and then down the oil production curve,

Peter.

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Guest Riser

CPI, up at 2.5% annual rate:

Highest CPI inflation since the data series began

GILT rates continuying to climb

The Party is over for the Property Bulls- 'tho some dont know it yet

Dr B ,

You mentioned 10 year Gilt ates o a previous thread, please could you provide a link to a site with charts and historical Gilts data, ideally inflation adjusted going back to 1970

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Manufacturing, IMHO, is affected by interest rates as and when they effect demand.

Most big firms (well, at least mine) converted long ago to concepts of cost of capital. Which, in general, is much higher than long term interest rates (and, again, note that we would use 10 year rates at least - because that is how long the project/ purchase needs to go on for, so base rate changes have less impacy)

And there is a surplus of cash in many companies now - leading to debt paydown, share buy backs etc. Companies are much more disciplined than 20-30 years ago about spending OPM. The company sector balance sheet is, ISTR, much more healthy than the household sector...

In my experience, cost of borrowing is almost the last thing considered when looking to invest... (for a manufacturing company)

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Apollo,

Could you please explain the logic of youre view that a house price crash CANNOT happen without ALL of these things?

For example, if unemployment rose rapidly without interest rate rises (because the economy is knackered) wouldn't it be extremely likely that house prices would fall?

And that is just one of your five necessary factors (others may precede or follow obviously). It seems you are trying TOO hard to convince yourself it is not possible.

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Guest Bart of Darkness
1. Core inflation is steady at 1.7% and RPI has dropped

Apollo, do you eat?

Do you use electricity or gas to heat your home?

If not, then congratulations, the core inflation figure has meaning to you.

Fort those of us who depend on those things, convieniently stripped out of the core inflation figure, it means nothing.

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apollo1966

Do you have any educational background in economics or are you just

a reader of the scum ?? May be a GCSE in economics might help. Hang

on I forgot they are giving them away in crisp packets. Back up what you

say with references not B*lls**t.

Next you will be telling us that 07/07 never happened.

Enough said. :D:lol::D

Edited by E Powell

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However core inflation was unchanged against 0.3% in August, which suggests that the rise in headline CPI was almost purely energy related. The deflationary impact of high energy prices will be a concern for the BoE and means the chance of a rate cut in November or January has increased markedly. With arch hawk Large gone from the MPC the chance of a rate cut to boost growth has increased (as indicated by the fall in sterling against the dollar and the euro this morning).

Hopefully this, the Royal Institute for Chartered Surveyors reporting that they expect house prices to rise in the next 3 months and Rightmoves asking prices rising will put to bed all this talk of a house price crash, it ain't gonna happen, the slowdown is all you will see and as i said earlier this month we will see house prices rise again next year as interest rates are cut to 4.25% or 4.%.

Hopefully this weight of data will take the wind out of the arch bears in the forum hoping for a crash so they can get on the ladder and the economic turmoil that would bring. But somehow i doubt it!!

Debt burdens brin on a slowdown in spending.

If everyone waiting to buy did buy their debt burdens would add to the probelms..

The high street would go into a recession and then the country would.

THERE IS NOT ENOUGH MONEY IN THE COUNTRY FOR PEOPLE TO BUY AT THESE PRICES WITHOUT CAUSING A RECESION.

THIS CANNOT BE ARGUED.

SAY THE COUNTRY HAD £100 AND LONG TERM AVERAGES MEANT THAT £20 OF THAT WENT TO PAY DEBT.

WE ARE NOW AT £23 (ONLY A FEW MUPPETS HAVE THIS DEBT LEVEL) AND THE ECONOMY IS MISSING THE MONEY

IT WOULD HAVE TO RAISE TO £40 FOR THE HOUSE PRICES TO BE STABLE

CUTTING ENOUGH MONEY FROM THE ECONOMY TO CAUSE IT TO FAIL.

AT WHAT POINT THIS HAPPENS IS NOT KNOWN, BUT CURRENT PRICES CAN NOT BE SUSTAINED IN THE ECONOMY.

IMPOSSIBLE.

NO CHANCE AT ALL ON ANY LEVEL.

IF YOU ARE TOLD THAT THERE IS, THE PERSON SAYING THIS IS WRONG.

IF THIS SEEMS OVER SIMPLISTIC ITS BECAUSE IT IS SIMPLE.

HOUSE PRICES TOO HIGH, TAKE TOO MUCH MONEY.

NOT ENOUGH SPENDING CAN BE MADE, NOT ENOUGH TAXES TO CAPTURE THE SPENDING.

ITS ALL ABOUT BALLENCE, AND IF YOU DON'T THINK BALLENCE IS REQUIRED IN THE ECONOMY THEN YOU HAVE NO CONCEPT ABOUT THE ECONOMY.

ITS NOT A MATTER OF IF PRICES FALL, ITS WHAT HAPPENS IF THEY DON'T WHICH CAUSES THEM TO THEN FALL...

PLEASE ARGUE THIS POINT.

DIRECTLY, DON'T SKIRT IT. READ IT ARGUE IT.

YOU CANT

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  • 301 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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