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Energy Costs 'to Drive Inflation' Up To 2.3%

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Sorry if this has already been posted

http://news.bbc.co.uk/2/hi/business/4871150.stm

Unless other components of inflation fall rapidly then the consumer component of the higher costs alone will drive inflation significantly above 2.3%. If they're implying that secondary effects will add an additional 0.2% then inflation will be well above its target.

T&T

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Unless other components of inflation fall rapidly then the consumer component of the higher costs alone will drive inflation significantly above 2.3%. If they're implying that secondary effects will add an additional 0.2% then inflation will be well above its target.

T&T

Thats what the mp3 players are for.

They'll just adjust mp3 players weightings so that they represent 1/2 of the CPI basket and inflation will dive to 1.5% so they can lower IRs to 3%.... possibly?

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I'm surprised that it's taken this long to see a report on it in the mainstream media. There seems to be a train of thought that these higher costs will be absorbed by producers and just disappear. If we look at energy prices today compared 1 and 2 years ago, it's a bit of a no-brainer to expect that at some point their effect would be passed on to consumers and show up in inflation figures.

The average cost of a barrel of Brent between April 02 and March 04 was just above $28.

the average cost over the last 2 years is above $50 and rising.

How can anyone in their right mind imagine that this will not show up somewhere? I think one of the reasons that the effects have been avoided until now has been price hedging by energy dependant producers. These hedges have to expire and I think that's what we will see happening now..

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Guest Guy_Montag

In addition to rapidly declining MP3 prices, they can add Car Tax for the low emission vehicles as these are dropping in price (ULEVs are free??). :lol:

To make the most of it, they should add the car tax for ULEV, while also adding the cost of a new SUV.

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I'm going blue in the face telling the bulls this would happen...but you know what those blindly positive buggers are like....

Ok 2 more things -

Wait until this impacts on house builders. Serious drop in sales and a serious increase in costs. You could look in stranger places for a loss leader in a falling market. Very motivated sellers these companies.

Secondly - this oil/energy thing is not over yet - not by a long shot.

If the Iranian president belches, the nigerian tribes decide they will stand up for their rights (armed by the chinese, maybe?) or President Chavez does the whole Castro show, then a HPC is a forgone conclusion.

Amazing really, that bulls are predicting rises when so much of this is out of their control and way beyond any national agencies control, let alone the haliwidemoves indices.

..but as has been proven time and again the loudest bulls on this board are EAs....

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Thats what the mp3 players are for.

They'll just adjust mp3 players weightings so that they represent 1/2 of the CPI basket and inflation will dive to 1.5% so they can lower IRs to 3%.... possibly?

Having just bought an LCD TV it made me wonder whether inflation is really low or not? A few years ago I would have bought a CRT say 21" for probably £300. Now I buy a 32" LCD for nearly £1,000. Is that not over 200% inflation? My example is to show that we're not replacing like with like. So in the new basket of goods that CPI comprises if we replace CRT with LCD TV then as LCD TVs come down in price they act to reduce inflation. However in reality we're all spending 2-3 times what we would have done on the previous generation of goods.

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Thats what the mp3 players are for.

They'll just adjust mp3 players weightings so that they represent 1/2 of the CPI basket and inflation will dive to 1.5% so they can lower IRs to 3%.... possibly?

Exactly - its that Nickelesque 'logic' to the economy.

Higher inflation means less money in peoples pockets to spend on high street - Answer: reduce interest rates, so people can borrow more and keep spending

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Having just bought an LCD TV it made me wonder whether inflation is really low or not? A few years ago I would have bought a CRT say 21" for probably £300. Now I buy a 32" LCD for nearly £1,000. Is that not over 200% inflation? My example is to show that we're not replacing like with like. So in the new basket of goods that CPI comprises if we replace CRT with LCD TV then as LCD TVs come down in price they act to reduce inflation. However in reality we're all spending 2-3 times what we would have done on the previous generation of goods.

There are literrally no CRT's available now!

TVs have increased in price 2 fold.

Just because they have made them smaller

I mean should we not compare a ford fiesta of 1990 with a 2006 ford fiesta? I mean they do come with electrical everything now, but essentially Like 4 Like!

what Inflation would we be looking at then?

its just the same with most electrical products!

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My local Chippy has put the price of a bag of chips up from £1 to £1.10, the increase in gas and electricity is kicking in.

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There are literrally no CRT's available now!

TVs have increased in price 2 fold.

Just because they have made them smaller

I mean should we not compare a ford fiesta of 1990 with a 2006 ford fiesta? I mean they do come with electrical everything now, but essentially Like 4 Like!

what Inflation would we be looking at then?

its just the same with most electrical products!

I think that LCD TVs will drop in price to match the price of CRTs. Does it really cost that much more to manufacture a LCD? Same thing happened with DVD players. I think that (WAP may be the expert here) fundamentally a LCD TV should cost less to manufacture than a CRT, but for a while there will be a premium due to "novelty", costs involved in developing a new technology, and supply/demand. Eventually LCDs will find their price. I payed £70 for a cxxpy DVD player from ASDA. The same brand similar player is £30 now. Did VCRs ever get that cheap? I think the same will happen for LCD and Plasma TVs.

Billy Shears

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I think that LCD TVs will drop in price to match the price of CRTs. Does it really cost that much more to manufacture a LCD? Same thing happened with DVD players. I think that (WAP may be the expert here) fundamentally a LCD TV should cost less to manufacture than a CRT, but for a while there will be a premium due to "novelty", costs involved in developing a new technology, and supply/demand. Eventually LCDs will find their price. I payed £70 for a cxxpy DVD player from ASDA. The same brand similar player is £30 now. Did VCRs ever get that cheap? I think the same will happen for LCD and Plasma TVs.

The main cost with LCDs at the moment is building the fabs (manufacturing plant).

They cost billions to build and they need to recoup the cost.

They are getting there though. I bought an LCD this year after our TV broke and it cost £700 for a 32".

They were double this last year, and already compare favourably with CRT prices of a few years ago. I remember my father paid £1000 for a 25" CRT in the late 80's.

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I think that LCD TVs will drop in price to match the price of CRTs. Does it really cost that much more to manufacture a LCD? Same thing happened with DVD players. I think that (WAP may be the expert here) fundamentally a LCD TV should cost less to manufacture than a CRT, but for a while there will be a premium due to "novelty", costs involved in developing a new technology, and supply/demand. Eventually LCDs will find their price. I payed £70 for a cxxpy DVD player from ASDA. The same brand similar player is £30 now. Did VCRs ever get that cheap? I think the same will happen for LCD and Plasma TVs.

Billy Shears

Thats true once the technology has reached maturity.

A mature product has a stable production line that needs little change or re-tooling as the product remains the same with little or no technological development. CRTs have been around a very long time and not much in the way of technology change has occurred.... thus they can mass produce them and get very long runs of high quantities of CRTs from a production plant.

At the moment LCD/Plasmas are still evolving... ever larger sizes, ever higher definition, clearer picture etc. So to compete they are having to change (or update) the production line more frequently... leading to higher costs. And they are having to invest more in R&D to remain competitive... I'm not sure we'll see LCD/Plasma getting to CRT prices for a while yet.

In terms of costs to produce (ignoring production line changes) I would guess that LCD/Plasma require less in the way of raw materials, but they do require a lot more in the way of delicate electronics, so it will not be a materials related issue, more that it is a more complicated assembly line.

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An interesting argument I've heard around the place is that increased oil prices have acted as a proxy for higher interest rates and have damped a lot of demand. Seems to me that this effect would be counterbalanced by higher input costs, but who knows?

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Following up the LCD thread. A few years ago (about 4?) I went into a shop to look at one of these massive great LCD/Plasma (not sure which) TVs. The picture was horrible. And I think this might have been "The Sony Shop", so presumably it would have been a good brand. The people in the shop tried to get me to sit in just the right position, and the picture was better. But still not good enough. Just the other day I wandered in Richer Sounds. I was pleasantly surprised to see the massively improved picture quality. Still too expensive for a miser like me, but definitely heading in the right direction.

Billy Shears

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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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