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Why Is The Rest Of The World Suffering Inflation

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How oh How?

how is our sterling still so strong.

cheap chinese imports are not curbing inflation in other countries but is a main reason as to why ours is so low.

what will be the main driver for inflation here and when?

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how is our sterling still so strong.

Because people are selling short sterling in anticipation of interest rate rises.

Cheap chinese imports are not curbing inflation in other countries but is a main reason as to why ours is so low.

Ours isn't low. The figures are being fiddled. The weightings given to things that are soaring in price, and which people are pretty much forced to buy, like gas and electricity, have been reduced over the years, while the prices of things that are stagnating or falling in price, such as electrical goods and new cars, that people can opt not to buy, have had their weightings increased. This distorts the figure downwards to offset the actual increase in cost of living and gives the totally spurious 2.2% figure that we currently have. My basic living costs have gone up about 15% each year for the least three years. Sure cheap imported goods are falling in price, but noone's buying them because they can only just afford their unavoidable basic living costs. But according to the ONS people are spending a larger proportion of their household budget on cheap imported goods and less on unavoidable basic living costs! It's all one big fiddle aimed at making GB look competent.

what will be the main driver for inflation here and when?

What? Gas, electricity, water rates and council tax (which isn't included in inflation calculations, surprise surprise!)

When? It started several years ago.

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this is the one bit i dont get.

mr brown can fudge the figures all he likes, the boe can fudge the figures to fit in with their end game, but surely if the markets suspect that the british are going to try and inflate their way out of this then the pound should colape. but it seems to be holding strong.

i can only assume that they must believe what they are being told. trouble might come and rather fast, when they discover that mr brown is leading them up the garden path.

the longer they put off the rate rises needed, the harder the markets will punish them.

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this is the one bit i dont get.

mr brown can fudge the figures all he likes, the boe can fudge the figures to fit in with their end game, but surely if the markets suspect that the british are going to try and inflate their way out of this then the pound should colape. but it seems to be holding strong.

The pound is strong because those who don't have their heads up their backsides can see exactly what's happening and that the longer it's covered up the sharper the rate rises will be when they start... so they're selling short sterling. Short sterling is basically a contract which increases is value when the pound falls and decreases in value when the pound rises. Rate rises lead to a stronger pound so the smart investors are selling short sterling now to make sure they are ahead of the game.

the longer they put off the rate rises needed, the harder the markets will punish them.

Exactly. By delaying the inevitable they'll exacerbate it. Instead of turning the tap off they're going to let the bath overflow.

Edited by Bingley Bloke

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But energy prices are in the basket which was the main driver for a .02% increase in inflation.

is the rest of the world's inflation increases due to mainly energy?

we have a massively increased money supply.

supply and demand. if demand is high for goods why are goods not increasing in price regardless how much we import them for.?

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But energy prices are in the basket which was the main driver for a .02% increase in inflation.

Yeah, but if energy prices hadn't had their weightings reduced significantly they'd have driven inflation up by a hell of a lot more than 0.2%. Basically the ONS knows that energy prices are driving inflation so they're reducing the weighting of them within the CPI basket to try to offset the effect. In reality your energy bills now represent a larger proportion of your take home pay, but according to ONS figures they represent a smaller proportion! Can anyone here honestly say their gas bills have gone down?

There was a good thread a few months ago illustrating how things like gas an electricity had had their weightings reduced since 1997 while things like new cars had had their weighting increased, even though in relaity the opposite had happened. It's all one big cover-up and the longer it goes on the worse the consequences will be when they can cover it up no more. Brown is running scared.

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Yeah, but if energy prices hadn't had their weightings reduced significantly they'd have driven inflation up by a hell of a lot more than 0.2%. Basically the ONS knows that energy prices are driving inflation so they're reducing the weighting of them within the CPI basket to try to offset the effect. In reality your energy bills now represent a larger proportion of your take home pay, but according to ONS figures they represent a smaller proportion! Can anyone here honestly say their gas bills have gone down?

There was a good thread a few months ago illustrating how things like gas an electricity had had their weightings reduced since 1997 while things like new cars had had their weighting increased, even though in relaity the opposite had happened. It's all one big cover-up and the longer it goes on the worse the consequences will be when they can cover it up no more. Brown is running scared.

that is scandelous, there must be some group somewhere that can highlight this, i would have expected opposition parties to have noticed and highlight to the moonstruck catsnip effect sheeple of this country.

in the long term the effect i guess will be less money in the consumers pocket but we keep buying goods through credit etc, and gb can keep this up for quite a while longer if he keeps fudging figures. the effect could take a whule to unravel and by then i and many others would have wasted years of ladder climbing time and be too old to own and enjoy a nice home.

what a fark up i had enough of this shite. the only major effect to speed things up is rising import costs.. China. or drop in sterling and the sooner the better.

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Here we go, I found it...

Here are the weightings for 1996 and 2005.

The reduction is weighting for food and fuel is particularly noticeable, as is the massive increase in weighting for 'miscellaneous goods'.

1 Food and non-alcoholic beverages 15.6 -> 10.6

2 Alcoholic beverages and tobacco 7.0 -> 4.6

3 Clothing and footwear 6.7 -> 6.3

4 Housing, water, electricity, gas and other fuels 13.4 -> 10.5

5 Furniture, household equipment and maintenance 9.0 -> 6.5

6 Health 0.7 -> 2.4

7 Transport 15.4 -> 14.8

8 Communication 2.1 -> 2.5

9 Recreation and culture 13.1 -> 15.1

10 Education 1.1 -> 1.7

11 Restaurants and hotels 11.1 -> 13.9

12 Miscellaneous goods and services 4.8 -> 11.1

All the weightings are parts per thousand. Basically the total value of the CPI basket is 1000, so each item in the basket has a value out of 1000 and if you add the value of all the items together you get 1000.

Interesting then, isn't it, that the weighting for housing, water, electricity, gas and other fuels has fallen from 13.4 parts per 1000 in 1996 to 10.5 parts per 1000 in 2006! So these costs have fallen from 1.34% of the average houshold expenditure in 1996 to just 1.05% of the average household expenditure in 2005!! Do you know anyone who was paying just 1.05% of their household budget on housing, water, electricity, gas and other fuels in 2005? Richard Branson perhaps?

Edited by Bingley Bloke

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Guest Bart of Darkness
in the long term the effect i guess will be less money in the consumers pocket

This is when people will start to ask questions.

Exactly. By delaying the inevitable they'll exacerbate it. Instead of turning the tap off they're going to let the bath overflow.

I did that once. Made a right mess!

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The thing that worries me most is that wage inflation (well mine atleast) is lower than actual inflation and that every year we end up poorer.

How will this mess be sorted?

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How will this mess be sorted?

My guess would be a total economic collapse after the North Sea oil runs out. I honestly think Britain is much too far gone to be saved at this point, particularly as the old farts will keep voting themselves more and more stuff until the remaining tax-payers go on strike.

Fixing Britain would, at a minimum, mean sacking about 80% of the government employees and destroying the welfare state: that's impossible in a democracy because most people will always vote to steal money from their neighbours, so it will only happen when the whole thing falls apart.

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I thought it would be interesting to do a quick comparison between the US & UK CPI baskets.

UK per Bingley Bloke for 2005, amended by me:

1 Food and non-alcoholic beverages 10.6

2 Alcoholic beverages and tobacco 4.6

3 Clothing and footwear 6.3

4 Housing, water, electricity, gas and other fuels 10.5

5 Furniture, household equipment and maintenance 6.5

6 Health 2.4

7 Transport 14.8

8 Communication 2.5

9 Recreation and culture 15.1

10 Education 1.7

11 Restaurants and hotels 13.9

12 Miscellaneous goods and services 11.1

US figures 2005:

1 Food and non-alcoholic beverages 8.9 (see #11 below)

2 Alcoholic beverages and tabacco 1.8

3 Clothing and footwear 3.8

4 Housing, water, electricity, gas and other fuels 36.9

5 Furniture, household equipment and maintenance 5.5

6 Health 6.2

7 Transport 17.4

8 Communcation 3.1

9 Recreation (no entry for culture - not surprising ;) ) 5.6

10 Education 3.0

11 Restaurants (food away from home - nothing for hotels) 6.2

12 Other goods and services 3.4

source http://www.bls.gov/cpi/cpid0605.pdf

There are some very revealing differences in methodology here particularly in regard to Housing which is surely a more representative weighting relative to take home pay than the UK.

Edited by nimmmm

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How oh How? how is our sterling still so strong. cheap chinese imports are not curbing inflation in other countries but is a main reason as to why ours is so low. what will be the main driver for inflation here and when?

The implied irony in your headline says it all for me.

The situation we face today is like incest in a family. Gordon Brown has rogered our pensions, our manufacturing industries and our public finances. By failing to speak out against this abuse, our media have become guilty by association. For this reason they now have to tow the line and go along with the lies and deceit.

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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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