Jump to content
House Price Crash Forum
Sign in to follow this  
Guest UK Debt Slave

Someone Explain Please!

Recommended Posts

Guest mattsta1964

Could someone explain how inflation has stayed low despite the huge increase in oil, gas and commodity prices, doubling of council tax, double and a half house prices, huge increases in the cost of living etc etc................

So how has this trick of keeping inflation and interest rates so low been achieved?

Share this post


Link to post
Share on other sites

Could someone explain how inflation has stayed low despite the huge increase in oil, gas and commodity prices, doubling of council tax, double and a half house prices, huge increases in the cost of living etc etc................

So how has this trick of keeping inflation and interest rates so low been achieved?

Strawberries fell in price 1 month a while ago. That helped.

And I think there may have been a fall in the price of shoes but I'm not sure anymore.

Edited by Ignorant Steve

Share this post


Link to post
Share on other sites

Could someone explain how inflation has stayed low despite the huge increase in oil, gas and commodity prices, doubling of council tax, double and a half house prices, huge increases in the cost of living etc etc................

So how has this trick of keeping inflation and interest rates so low been achieved?

Inflation is a tale of two stories.

Service inflation - has been increasing more than CPI

Goods inflation - has been increasing less than CPI

The average of the two is the CPI figure

Basically the cheap imported goods have been getting cheaper and this has offset much higher inflation elsewhere. It's known as the 'china' effect.

There are also tricks that Gordon Brown can perform. For example when he offered free bus passes to pensioners it had a downward effect on inflation as transport costs went down.

House prices are kept out because they aren't included in CPI. They are in RPI but it is the mortgage costs and not the house prices that are measured. As mortgage costs have decreased due to interest rates getting lower the impact does not show up in inflation so much.

Also hedonics are used. This means that they say that a £500 laptop is cheaper than a £500 laptop last year because this year it has a bigger processor, more memory and is therefore cheaper. Many people, myself included totally disagree with the use of this method.

Also, I believe that council tax is also kept out of CPI - the official measure used by the Bank of England

Edited by munimula

Share this post


Link to post
Share on other sites

Inflation is a tale of two stories.

Service inflation - has been increasing more than CPI

Goods inflation - has been increasing less than CPI

The average of the two is the CPI figure

Basically the cheap imported goods have been getting cheaper and this has offset much higher inflation elsewhere. It's known as the 'china' effect.

There are also tricks that Gordon Brown can perform. For example when he offered free bus passes to pensioners it had a downward effect on inflation as transport costs went down.

House prices are kept out because they aren't included in CPI. They are in RPI but it is the mortgage costs and not the house prices that are measured. As mortgage costs have decreased due to interest rates getting lower the impact does not show up in inflation so much.

Also hedonics are used. This means that they say that a £500 laptop is cheaper than a £500 laptop last year because this year it has a bigger processor, more memory and is therefore cheaper. Many people, myself included totally disagree with the use of this method.

Also, I believe that council tax is also kept out of CPI - the official measure used by the Bank of England

Personally I thought my answer was more succinct and covered all that you've mentioned. PLUS the all important fact that the "china" effect is now expected to fade away.

Less is more.

Share this post


Link to post
Share on other sites

Could someone explain how inflation has stayed low despite the huge increase in oil, gas and commodity prices, doubling of council tax, double and a half house prices, huge increases in the cost of living etc etc................

So how has this trick of keeping inflation and interest rates so low been achieved?

Try this thread...

http://www.housepricecrash.co.uk/forum/ind...c=32349&hl=

Share this post


Link to post
Share on other sites

that picture says it all. asset price inflation vs. consumer price infllation.

central banks are happily increasing money supply with 8 - 14% a year.

most of it ends up in asset price inflation or anywhere else outside the cpi basket

and is not covered by official inflation measures.

CSF118.gifnice pic

Share this post


Link to post
Share on other sites
Could someone explain how inflation has stayed low despite the huge increase in oil, gas and commodity prices, doubling of council tax, double and a half house prices, huge increases in the cost of living etc etc................

So how has this trick of keeping inflation and interest rates so low been achieved?

Because they are measuring the wrong type of inflation. Just print off a list of what has gone up, and what has gone down (or stayed roughly the same), you will soon find most things you need to spend money on has gone up, and most things you don't need to spend money on has gone down (or stayed the same).

What has surprised me is how people have excepted it. I hear it quite a lot people complaining about increases in ... [whatever]. But I think people aren't protesting because they can easily borrow (against their house) to get through this rough patch.

I just want to see how this spans out over the next 2 years or so when people realise it isn't a blip.

Share this post


Link to post
Share on other sites

I just received my insurance renewal. Up 10%.

I MUST have insurance so therefore it is not an item Gordon considers as a reliable measure of inflation. WAFJ! :angry:

Edited by Realistbear

Share this post


Link to post
Share on other sites

government caps what it sees as inflation.. essentially stops printing money...

Money lenders can print money.. but only by drawing on money from the future....

if that makes no sense... then step back.. get that little judder..

and well... ;)

as long as the pound does not de-value.. then things can cost as much as you want.. The pound drops when more of it exists... so.. that is why it is okay with no wage push inflation..

but things are more expensive now.. so we need more money..

Mew has made up 9% of post tax income and debt has considerably more then doubled in the past few years.. the past few years of low inflation..

It is low inflation.. we need more money.. but the government does not need to print it as we are borrowing it.. if you like the lenders are printing it now..

see.. :)

(Note this does not make a miracle economy.. Well there is one miracle.. and that is that the damn thing still stands..)

Edit... (its not still standing.. a house of cards for an economy that would have been in recession had it not been for the fact that people actually think that they are richer if they increase their mortgage in order to buy a fwd.. this might seem glib.. but it is fact)

Edited by apom

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 333 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.