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Cpi 2.0% February, Up From 1.9%

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http://www.statistics.gov.uk/pdfdir/cpi0306.pdf

In the year to February, the consumer

prices index (CPI) rose by 2.0 per cent,

up from 1.9 per cent in January.

In the year to February, the all items retail

prices index (RPI) rose by 2.4 per cent,

unchanged from January.

Over the same period, the all items RPI

excluding mortgage interest payments

index (RPIX) rose by 2.3 per cent,

unchanged from January.

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Guest struthitsruth

I like this bit, as I'm hoping to buy in the summer (car not house !)

The largest downward contribution to the change in the all items RPI

rate came from motoring costs with downward pressures from:

• Purchase of motor vehicles, with prices for second hand cars

falling in February in contrast to rises a year ago;

;)

Edited by struthitsruth

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Photographic and optical equipment –23.6 on the year

Data processing equipment –14.2 on the year

Reception sound and pictures –14 on the year

All those minuses make me want to spit

We all know that the cost of buying this equipment has not got cheaper – the spec has got better i.e. kept up to date

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Photographic and optical equipment –23.6 on the year

Data processing equipment –14.2 on the year

Reception sound and pictures –14 on the year

All those minuses make me want to spit

We all know that the cost of buying this equipment has not got cheaper – the spec has got better i.e. kept up to date

Welcome to the world of hendonistic adjustments!

:angry:

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Note that they have removed TV licenses as they expect a 34 pound hike to cover digital broadcasts. That is a 25% inflation rate--not the sort of thing the government want to include is it?

Dishonesty? You bet!

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This morning on Radio 2 they were discussing the change to the CPI basket. Terry Wogan said something along the lines of "whenever they want to fiddle the figures all they do is change the basket - they must think we're all ejits!".

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I do not full understand how it is calculated. There seems to be a lot of confusion. Does anyone know a simple and accurate guide?

E.g.

TVs cost £100 LCDs cost £1000

If the average person spends £200 on TVs - 2 tvs.

TVs cost £30 LCDs cost £500

Then the average person spends £500 on 1 lcd tv.

OPTIONS

Fall of £70 because the TV that cost £100 now costs £30?

Fall of £500 because the LCD that people are now buying used to cost £1000 and now costs £500.

Rise of £300 because they are now spending £300 more on electrical items?

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I do not full understand how it is calculated. There seems to be a lot of confusion. Does anyone know a simple and accurate guide?

E.g.

TVs cost £100 LCDs cost £1000

If the average person spends £200 on TVs - 2 tvs.

TVs cost £30 LCDs cost £500

Then the average person spends £500 on 1 lcd tv.

OPTIONS

Fall of £70 because the TV that cost £100 now costs £30?

Fall of £500 because the LCD that people are now buying used to cost £1000 and now costs £500.

Rise of £300 because they are now spending £300 more on electrical items?

Have a look on the ONS website if you can be bothered to read it.

OfficeForNationalLies

This morning on Radio 2 they were discussing the change to the CPI basket. Terry Wogan said something along the lines of "whenever they want to fiddle the figures all they do is change the basket - they must think we're all ejits!".

I always like Terry... very straightforward.

Good Euro song coverage :P

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Have a look on the ONS website if you can be bothered to read it.

OfficeForNationalLies

That is very aggressive and negative. I have read the last CPI, but it is not very clear.

From my understanding it's the increase in the percentage that is spent on that product area - I thought I would ask the question so someone knowledgable could explain what the problem is with CPI.

This doesn't match 99% of what people post in this forum though, over and over, about electronics falling in price bring it down - if people are spending the same it doesn't matter. If everything costs more, but people are buying less - so spending the same, inflation shouldn't be rising.

I have not come across a consise explaination - or way to estimate what the next figures are going to be before they are released.

I keep reading a lot of posts from people who, like me, are not experts on inflation saying inflation is going to rocket, with flawed arguments and it is very irritating.

Eg if you are under the impression that CPI is going to double in the next 6 months and it rises 0.25% that's 800% wrong and you shouldn't be posting in an authoritive way.

CPI is quite a key point, so i will ask again, does anyone know of any (unbiased) information that details how CPI is calculated and why the current method might is flawed. I have a feeling that taking house prices out of CPI would have an effect of lowering CPI as house prices increase and increase CPI as house prices stablise.

A research paper into CPI is clearly the missing link from the research papers listed on the front page - as I understand it either CPI is the trigger or change in sentiment is the trigger of a house price crash, change in sentiment is very well represented in the research papers but CPI doesn't have any.

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Guest Riser

That is very aggressive and negative. I have read the last CPI, but it is not very clear.

Eg if you are under the impression that CPI is going to double in the next 6 months and it rises 0.25% that's 800% wrong and you shouldn't be posting in an authoritive way.

CPI is quite a key point, so i will ask again, does anyone know of any (unbiased) information that details how CPI is calculated and why the current method might is flawed. I have a feeling that taking house prices out of CPI would have an effect of lowering CPI as house prices increase and increase CPI as house prices stablise.

CPI is irrelevant, as a measure of inflation it has been manipulated and distorted by Brown and the BOE to such an extent that it has lost all credibility in the eyes of the British public.

Who gives a stuff about CPI when your outgoings are more than your earnings, the BOE will crush any signs of wage inflation as soon as it appears, then we will see real financial distress across all sections of our society.

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CPI is irrelevant, as a measure of inflation it has been manipulated and distorted by Brown and the BOE to such an extent that it has lost all credibility in the eyes of the British public.

Inflation is relivant, CPI is a measure of inflation.

So logically:

CPI is relivant if it is an accurate measure of inflation.

(1). Is there any proof (with numbers) that CPI is not an accurate measure of inflation?

Who gives a stuff about CPI when your outgoings are more than your earnings, the BOE will crush any signs of wage inflation as soon as it appears, then we will see real financial distress across all sections of our society.

That's depression, I think depression is different to inflation.

At the moment people are just cutting out of luxuries so prices are rising but inflation isn't because people are spending the same - less luxuries isn't going to destory society.

(2). Will inflation rise when neccessities are left?

If we assume:

House prices don't rise - they aren't.

We know:

People stop spending their increase in earning on house prices.

EITHER

People save the money - Depression.

or

People spend the spare money on other things listed in the CPI - Inflation.

(3). Is there any other scenario?

Before I read any research papers I thought I knew how it all worked, but the more I read the less I realise I know.

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CPI is irrelevant, as a measure of inflation it has been manipulated and distorted by Brown and the BOE to such an extent that it has lost all credibility in the eyes of the British public.

Who gives a stuff about CPI when your outgoings are more than your earnings, the BOE will crush any signs of wage inflation as soon as it appears, then we will see real financial distress across all sections of our society.

Sure CPI is irrelevant.

If the BOE used RPI though, which is above 2%, it would have to raise rates? This would be a further blow to the home owners on top of the massive hikes in council tax, oil and utility bills?

Anyway, wage inflation is above CPI. So that dampens the getting poorer effect slightly!

Inflation is relivant, CPI is a measure of inflation.

So logically:

CPI is relivant if it is an accurate measure of inflation.

(1). Is there any proof (with numbers) that CPI is not an accurate measure of inflation?

That's depression, I think depression is different to inflation.

At the moment people are just cutting out of luxuries so prices are rising but inflation isn't because people are spending the same - less luxuries isn't going to destory society.

(2). Will inflation rise when neccessities are left?

If we assume:

House prices don't rise - they aren't.

We know:

People stop spending their increase in earning on house prices.

EITHER

People save the money - Depression.

or

People spend the spare money on other things listed in the CPI - Inflation.

(3). Is there any other scenario?

Before I read any research papers I thought I knew how it all worked, but the more I read the less I realise I know.

Do you live in a cave?

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That is very aggressive and negative. I have read the last CPI, but it is not very clear.

From my understanding it's the increase in the percentage that is spent on that product area - I thought I would ask the question so someone knowledgable could explain what the problem is with CPI.

This doesn't match 99% of what people post in this forum though, over and over, about electronics falling in price bring it down - if people are spending the same it doesn't matter. If everything costs more, but people are buying less - so spending the same, inflation shouldn't be rising.

I have not come across a consise explaination - or way to estimate what the next figures are going to be before they are released.

I keep reading a lot of posts from people who, like me, are not experts on inflation saying inflation is going to rocket, with flawed arguments and it is very irritating.

Eg if you are under the impression that CPI is going to double in the next 6 months and it rises 0.25% that's 800% wrong and you shouldn't be posting in an authoritive way.

CPI is quite a key point, so i will ask again, does anyone know of any (unbiased) information that details how CPI is calculated and why the current method might is flawed. I have a feeling that taking house prices out of CPI would have an effect of lowering CPI as house prices increase and increase CPI as house prices stablise.

A research paper into CPI is clearly the missing link from the research papers listed on the front page - as I understand it either CPI is the trigger or change in sentiment is the trigger of a house price crash, change in sentiment is very well represented in the research papers but CPI doesn't have any.

My sincerest apologies... I did not intend to be aggressive or negative.

Hedonic adjustment could be described as taking into account where something is better than it previously was for the type of goods. So taking into account any improvement in the same products.

It is very dubious how you measure it, and I'm not sure they give accurate reasoning within the CPI measurements (dubious practice entirely IMHO).

For example:

A Computer sells in 2000 for £1000, CPU of 1Ghz with 256Mb RAM (for example).

A computers sells in 2005 for £500, CPU of 2Ghz with 1Gb RAM

The computer is already deflationary to the tune of 50% in 5 years (approx 10% pa), but hedonic adjustment will also try to measure the fact that you now also get a better specification for your price paid, and adds further deflationary pressure to the measurement of the computer.

Eg if you are under the impression that CPI is going to double in the next 6 months and it rises 0.25% that's 800% wrong and you shouldn't be posting in an authoritive way.

OK, I see where you are going.

I don't think CPI will neccessarily double, or even increase (This depends on the political will of whoever tells the ONS what they want CPI to be - within reason).

CPI is IMHO a fiddled statistic.

Using hedonic adjustments and manipulating the basket contents (towards deflationary rather than inflationary items) can allow the ONS to deliberately keep the inflation statistic low - despite real inflationary pressures in the real world.... takes the biscuit when people refer to CPI as 'real' inflation.

How far can they fudge CPI (and other measures) before the public notice.... well I'm beginning to think that they've pushed it about as far as they can without it being noticed on a wider scale (press, media etc).

You need to look at how you measure inflation in other ways than the CPI measure in order to get a true picture, particularly M4 Money supply stats (on Bank of England website). Oil prices are also a good forward indicator of inflation as oil is used to produce, transport etc almost everything that we buy. High oil prices (if sustained) always eventually lead to higher inflation once it feeds through the supply chain.

If you want to figure out whether to believe CPI or not, then look no further than waht you purchase yourself. Has what you spend gone up by ~2% a year in the last few years.... or has it risen faster?

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If the BOE used RPI though, which is above 2%, it would have to raise rates?

The BoE lowered its target from 2.5% to 2.0% when it moved from targeting RPI to targeting CPI.

The current RPI level of 2.4% would actually have been below target.

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If you want to make anything from CPI, simply apply the following abstract formula to the Nu Labour la la land measure:

x3

i.e.

CPI was 1.9%, converted to the real world that is 1.9 x 3 = 5.7% real world value

CPI increased to 2.0%, converted to real world that is 2.0 x 3 = 6% current inflation.

Silly billies

:ph34r:

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Inflation is relivant, CPI is a measure of inflation.

(1). Is there any proof (with numbers) that CPI is not an accurate measure of inflation?

(2). Will inflation rise when neccessities are left?

(3). Is there any other scenario?

Inflation is relivant, CPI is a measure of inflation.

Agreed, Inflation is relevant to house prices, and relevant in general economics.

But the only inflation relative to housing is input inflation (wage inflation, or inflation of disposable income) and output inflation (house price inflation).

(1). Is there any proof (with numbers) that CPI is not an accurate measure of inflation?

Proof would be a fine thing indeed. But proof is not quite what you'll find, you could only prove it if there were better documentation of the methodology used for dropping/adding items in the CPI basket. And better documentation of hedonic adjustments. Also better documentation on weightings (forgot those in earlier replies - yet another way the stats can be fudged).

The best thing to look at, if you think there is a big conspiracy in measuring CPI, is the list of items that have been adopted into and dropped from the CPI basket over the last few years. Then figure out whether the items dropped were on the whole inflationary, and whether the items added were on the whole deflationary.

(2). Will inflation rise when neccessities are left?

not quite sure what you're getting at here, but:

CPI is a measure of inflation, not inflation itself. If it was an appropriate, accurate and fair measure then it would reflect the inflation in goods that consumers purchase (thats why its called Consumer Price Inflation [CPI]).

IMHO, CPI is not an accurate reflection of what people spend their money on, especially neccessities.

Neccessities (such as energy bills?) don't seem to be reflected so much by CPI now. Weightings for neccessary goods seem to be getting lower despite these being inflationary items (don't believe me though, go do your own research).

Does CPI have to rise if people only buy neccessities. No, CPI will always be whatever the ONS (or their puppet-masters) decide it should be - within certain limits beyond which the public notice they are being fleeced.

(3). Is there any other scenario?

CPI is, as someone else said, largely irrelevant though.

Its used to convince the public that inflation is low, it does not neccessarily reflect real inflation that people have to live with.

Whether CPI rises or falls has little to no impact on most people other than the fact that it is used (along with RPI, RPIX) by employers to set wage increases.

What matters to most people is again input and output inflation:

Input: Wage inflation

Output: Inflation of items purchased (discretionary and neccessary) with income minus taxes.

The net difference between the input and output inflation could be described as the increase (inflation) or decrease (deflation) of disposable income.

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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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