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Guardian Reveals How Inflation Is Kept So Low In U K

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http://money.guardian.co.uk/news_/story/0,,1840866,00.html

Cheap goods lighten the burden on inflation of rising energy costs

Katie Allen
Thursday August 10, 2006
The Guardian
Petrol prices have soared, gas bills keep rising and water rates are up, so why hasn't inflation taken off more? The key is that behind those high-profile hikes, many goods are still getting cheaper and that keeps a cap on overall consumer price inflation.
Everyday life certainly seems pricier for most households. They have been hit by an 80% rise in energy bills over the past three years, council tax has risen and paying a pound for a litre of petrol is no longer out of the ordinary.
But at the same time the price of clothes, shoes, phone calls and electronic goods is falling.
Cheap imports from China have cut the cost of goods
from televisions to T-shirts. A camera that cost £100 a year ago is now likely to be nearer £70. Computers are down a tenth from last year and for those who pay for internet access, the "broadband bloodbath" among providers has kept those costs low too.
In the world of transport, second-hand cars are getting cheaper, road duty has been frozen for years and the rapid rise of low-cost carriers such as easyJet and Ryanair has kept airfares down.

So the solution is to borrow more to buy more tat! The more tat the more price increases in the non-discretionaries will be neutralised. Who would have thought of that plan to eliminate inflation. A Miracle--a true Miracle ( cue: voices of masses of angelic singing in background) <_<

The only slight hitch is that everything we buy is made overseas and soon there will be no more jobs which means the sheeple can't borrow any more aganist their houses and then ........................... :o

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http://money.guardian.co.uk/news_/story/0,,1840866,00.html

Cheap goods lighten the burden on inflation of rising energy costs

But at the same time the price of clothes, shoes, phone calls and electronic goods is falling. Cheap imports from China have cut the cost of goods from televisions to T-shirts. A camera that cost £100 a year ago is now likely to be nearer £70. Computers are down a tenth from last year and for those who pay for internet access, the "broadband bloodbath" among providers has kept those costs low too.

From what I have been reading - the increased costs of raw materials and oil etc. are making Chinese products more expense.

That coupled with rising wages in China (okay, still cheap compared to West but on an upward trend)

With have been relying so long on Asia to keep inflation down - no it looks like that little strategy will soon be coming to an end

Oh dear, Mr Brown, what are you going to do?

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So the solution is to borrow more to buy more tat! The more tat the more price increases in the non-discretionaries will be neutralised. Who would have thought of that plan to eliminate inflation. A Miracle--a true Miracle ( cue: voices of masses of angelic singing in background) <_<

So the solution is to borrow more to buy more tat!

RB, you're incorrigible.

There is no mention of borrowing in this article.

The "tat" you mention includes such non-discretionaries as clothing, phone calls, computers and internet access.

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Oh dear, Mr Brown, what are you going to do?

Bring all the jobs back here and scrap the minimum wage. Soon this country will be full of people working for £7 a week yet somewhow in possession of £150K mortgages.

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So the solution is to borrow more to buy more tat!

RB, you're incorrigible.

There is no mention of borrowing in this article.

The "tat" you mention includes such non-discretionaries as clothing, phone calls, computers and internet access.

"Cheap imports from China have cut the cost of goods from televisions to T-shirts. A camera that cost £100 a year ago is now likely to be nearer £70."

The "tat" would include the above items many of which are made in China.

How do you think people pay for things in this country? It is widely publicised that household debt is approaching 1.3 trillion and bankruptcy related to unsecured lending is skyrocketing. People are obviously buying stuff and we also know that record numbers fo Asian made TVs were purchased this summer and I doubt many were paid by cash.

Sometimes you have to think behind the headlines to get to the bottom line.

____________________

WARNING: All comments by posters are the express opinion of the poster and may not necessarily reflect the views of others who use or manage this sight. Further, any articles posted may also relfect the views of the poster and may or may not support the views of everyone.

<_<

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So the solution is to borrow more to buy more tat!

RB, you're incorrigible.

There is no mention of borrowing in this article.

The "tat" you mention includes such non-discretionaries as clothing, phone calls, computers and internet access.

Since when were internet access and computers "non-discretionary" items? Like those people on council estates who seem to be able to afford Sky.

No, non-disrectionary items are things like utilities, council tax, income tax, ni contributions, food and probably running a car. Is the inflation rate for these things really 2.5%? You're having a larf matey :rolleyes:

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I'd love to see a breakdown of how our spending would actually have to be to be made up for 2.5% inflation figures to be accurate. I suspect it would look something like this:

Use central heating just seven days per year.

Turn lights on no more then 14 days per year.

Only eat cold food.

Commute by car one month per year, by public transport two months per year, walk to work on the other nine months.

Buy a new plasma TV, iPod, and computer every two months.

Buy new 'made in China' wardrobe three times every day.

Etc.

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Newspapers prices for one have gone through the roof. Observer £1.80, Sunday Telegraph £1.70.

No problem, journalists get theirs free.

The quality of analysis of the CPI basket and the growing non-relationship between actualy percentages spent onteh differnt items is appalling, no wonder the public are in the dark.

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Sometimes you have to think behind the headlines to get to the bottom line.

For sure. It's also crucial when reading your posts!

How do you think people pay for things in this country? It is widely publicised that household debt is approaching 1.3 trillion and bankruptcy related to unsecured lending is skyrocketing. People are obviously buying stuff and we also know that record numbers fo Asian made TVs were purchased this summer and I doubt many were paid by cash.

Did I say that say that debt was not at record levels? Or that it is not propping up consumer spending?

The point is that there is no mention of debt in the article, yet you begin your comment with "So the solution is to borrow more to buy more tat!"

The "so" implies that the article is suggesting you borrow and that you borrow to buy tat.

There is no mention of borrowing in the article. Borrowing is an important issue for sure but don't quote this article to back that point up since it has nothing to do with it.

The article is about how inflation is low overall, though there are some pockets of high inflation, because thay are compensated by pockets of falling prices. You might disagree with this overall analysis, but it does not imply you should borrow more to buy tat.

There is no suggestion that you should buy more anything in this article (it is the guardian!). Nor are the majority of the articles mentioned (clothes, shoes, phone calls, electronic goods, televisions, T-shirts, cameras, computers, internet access, second-hand cars, road duty, airfares) tat by your own definition below.

"Cheap imports from China have cut the cost of goods from televisions to T-shirts. A camera that cost £100 a year ago is now likely to be nearer £70."

The "tat" would include the above items many of which are made in China.

____________________

WARNING: All comments by posters are the express opinion of the poster and may not necessarily reflect the views of others who use or manage this sight. Further, any articles posted may also relfect the views of the poster and may or may not support the views of everyone.

<_<

:lol::lol::lol::lol::lol::lol::lol:

Might I suggest this instead.

WARNING: RB does not take kindly to people pointing out his poor analysis.

Since when were internet access and computers "non-discretionary" items? Like those people on council estates who seem to be able to afford Sky.

No, non-disrectionary items are things like utilities, council tax, income tax, ni contributions, food and probably running a car. Is the inflation rate for these things really 2.5%? You're having a larf matey :rolleyes:

Fair comment.

Strictly speaking, computers and internet access are discretionnary, though I know that I would never consider not having them and I would consider a person poor if they could not afford one. It is as bad, perhaps worse, than not having access to a phone.

Edited by Bucephalus

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For sure. It's also crucial when reading your posts!

Did I say that say that debt was not at record levels? Or that it is not propping up consumer spending?

The point is that there is no mention of debt in the article, yet you begin your comment with "So the solution is to borrow more to buy more tat!"

The "so" implies that the article is suggesting you borrow and that you borrow to buy tat.

There is no mention of borrowing in the article. Borrowing is an important issue for sure but don't quote this article to back that point up since it has nothing to do with it.

The article is about how inflation is low overall, though there are some pockets of high inflation, because thay are compensated by pockets of falling prices. You might disagree with this overall analysis, but it does not imply you should borrow more to buy tat.

There is no suggestion that you should buy more anything in this article (it is the guardian!). Nor are the majority of the articles mentioned (clothes, shoes, phone calls, electronic goods, televisions, T-shirts, cameras, computers, internet access, second-hand cars, road duty, airfares) tat by your own definition below.

:lol::lol::lol::lol::lol::lol::lol:

Might I suggest this instead.

WARNING: RB does not take kindly to people pointing out his poor analysis.

Fair comment.

Strictly speaking, computers and internet access are discretionnary, though I know that I would never consider not having them and I would consider a person poor if they could not afford one. It is as bad, perhaps worse, than not having access to a phone.

It does not take much of a leap to get from high spending in this country to debt. I am afraid you have got to face it, there is a problem in this country and the buying of more imported tat to keep inflation low will only work for a limited time and IMO time is up.

The point of the article that you seem to have missed in an attempt to throw the thread off on a Trolling exercise, is that the Miracle Economy that has appeared to have kept inflation tame by cheap imnports is not going to work. And you are right, the article does not mention debt but it is hard to see how you can rule it out as a direct consequence of spending. The Miracle Economy may be keeping inflation a little lower than would otherwise be the case due to Chinese imports but it is doing nothing to solve the debt crisis brought about because of the excessive purchase of imports. Another indirect effect you may have missed is that cheap imports are eroding employment in this country.

BTW, your statement that "Strictly speaking, computers and internet access are discretionnary" seems to be a little out of touch. We live in a communication age where email, online shopping, online bill paying etc is becoming non-discretionary. If you do not pay online many providers charge more. You can try to spin this out of the equation but I doubt many would agree with you on this.

Further, I think you may have misunderstood "tat". You said: "There is no suggestion that you should buy more anything in this article (it is the guardian!). Nor are the majority of the articles mentioned (clothes, shoes, phone calls, electronic goods, televisions, T-shirts, cameras, computers, internet access, second-hand cars, road duty, airfares) tat by your own definition below." It is not a question of "should" but the reality is that people are buying more, borrowing more and incurring more debt. If you had been keeping up with the news recently you would have seen the articles on repossessions, bankruptcy etc. that points to a very real problem. Its Bearish--but its real. Also, I am not sure that you can exclude the items you list from "tat." TVs and other electronic devices are very much discretionary items that people have indulged in to run up debt and the need to borrow more. T shirts may also be included as many buy these because of a logo and most come from Asia.

It is best to see the bottom line if you can. Debt is the problem. Purchasing in and of itself is not a problem. Its only when purchases get out of hand as they have in the UK that it becomes a problem. For the government to argue that inflation is not that bad because they exclude non-discretionaries and include "tat" underscores the dishonesty in the system. This was the point. My guess is that you do not have a very analytical approach and tend to see things on a surface level without getting behind the story to see what the bottom line really is? That's fair comment as we all approach things from a different perspective. However, it is always important to bear (pun intenteded) in mind that not everyone will agree with your approach and that its better to stay on topic than to try to derail a thread with parsing analysis as opposed to issue analysis.

Hi ho hi ho a-trolling we will go? <_<

Edited by Realistbear

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China now introduces new regulations about pollution.

http://english.people.com.cn/200607/16/eng...716_283616.html

This means more expeditures for producers, and higher prices of Chinese goods for us.

I think that with so huge money supply only Asia kept inflation in line. Now Asia changes its policy, they had to start to take care for enviroment. So, money supply will now contribute more than before to inflation.

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It does not take much of a leap to get from high spending in this country to debt.

Sure, but it is not a leap made in the article you quote. And yet your first sentence is "So the solution is to borrow more to buy more tat".

I am afraid you have got to face it, there is a problem in this country and the buying of more imported tat to keep inflation low will only work for a limited time and IMO time is up.

Yes there is a problem in this country with debt and probably one with inflation. I never denied that.

The point of the article that you seem to have missed in an attempt to throw the thread off on a Trolling exercise, is that the Miracle Economy that has appeared to have kept inflation tame by cheap imnports is not going to work.

It is not just imports which the article claims to be the cause of low inflation: phone calls, internet access, second-hand cars, road duty, airfares are not imported.

Perhaps the "Miracle Economy" is not going to work, but there is no analysis in the article that claims that. At best, it points out a few well known inflationary risks.

And you are right, the article does not mention debt but it is hard to see how you can rule it out as a direct consequence of spending. The Miracle Economy may be keeping inflation a little lower than would otherwise be the case due to Chinese imports but it is doing nothing to solve the debt crisis brought about because of the excessive purchase of imports. Another indirect effect you may have missed is that cheap imports are eroding employment in this country.

I do not deny the importance of the debt burden in this country nor am I unaware of the effects on employment.

I do deny the article you posted implies we should borrow more to buy more tat.

BTW, your statement that "Strictly speaking, computers and internet access are discretionnary" seems to be a little out of touch. We live in a communication age where email, online shopping, online bill paying etc is becoming non-discretionary. If you do not pay online many providers charge more. You can try to spin this out of the equation but I doubt many would agree with you on this.

This is a comment either in bad faith or without having read and/or understood what I said.

I began by classing computers and internet access as non-discretionnary as I think they are so important now. Then shermanator pointed out that you did not have to buy them to survive, and that they are hence discretionary (non-discretionary is defined as the purchase of physical necessities, such as food, clothing, and shelter, as well as the payment of taxes.). I agreed but pointed out that it would be bad not to have internet access and I would consider someone who could not afford it poor.

Further, I think you may have misunderstood "tat". You said: "There is no suggestion that you should buy more anything in this article (it is the guardian!). Nor are the majority of the articles mentioned (clothes, shoes, phone calls, electronic goods, televisions, T-shirts, cameras, computers, internet access, second-hand cars, road duty, airfares) tat by your own definition below." It is not a question of "should" but the reality is that people are buying more, borrowing more and incurring more debt. If you had been keeping up with the news recently you would have seen the articles on repossessions, bankruptcy etc. that points to a very real problem. Its Bearish--but its real. Also, I am not sure that you can exclude the items you list from "tat." TVs and other electronic devices are very much discretionary items that people have indulged in to run up debt and the need to borrow more. T shirts may also be included as many buy these because of a logo and most come from Asia.

Sure. But I was not denying that people are buying more, borrowing more and incurring more debt. I was taking issue with you implying that the article you posted implied we should borrow more to buy more tat.

It is best to see the bottom line if you can. Debt is the problem. Purchasing in and of itself is not a problem. Its only when purchases get out of hand as they have in the UK that it becomes a problem.

I basically agree with this, but would go further and say that debt is not a problem either if it is not out of hand. A certain level of debt is healthy and normal in an economy. And I would agree that it does seem that we are now past healthy levels into dangerous territory.

For the government to argue that inflation is not that bad because they exclude non-discretionaries and include "tat" underscores the dishonesty in the system.

I basically agree with this.

This was the point.

Then you made it badly by quoting an article that did not support it.

My guess is that you do not have a very analytical approach and tend to see things on a surface level without getting behind the story to see what the bottom line really is? That's fair comment as we all approach things from a different perspective.

:lol::lol:

I have to hand it to you, your rhetorics are good: a nice ad hominem attack.

However, it is always important to bear (pun intenteded) in mind that not everyone will agree with your approach and that its better to stay on topic than to try to derail a thread with parsing analysis as opposed to issue analysis.

I have no problem with people not agreeing with my approach, so long as it is for good logical reasons. In fact, I like multiple approaches as they serve as reality checks on each other. There are many right ways to aproach a problem. There are also many wrong ways as you demonstrated in this thread. I am interested in issue analysis. I wanted to understand why the guardian article was encouraging us to borrow more to buy tat, but then realised that your analysis of what was said in the article was wrong.

Hi ho hi ho a-trolling we will go? <_<

I am not a troll. I am a FTB who wants to try to understand the housing market before committing to the biggest financial decision in his life. Posting link and then implying they say things they don't does not help me or anyone else here.

Dismissing people who see flaws in your logic as trolls is too easy.

Edited by Bucephalus

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Yet another con trick. Of course a given camera or computer has got cheaper. A PC will go from state of the art to entry level in 2 years or less. A DSLR camera has a product lifecycle of about 3 years max, at the end of which they're at about 1/3 of initial value.

Consumer electronics goods are a figure massagers dream because any year-on-year analysis will be subjective. Ok, so you could compare the cost of an "average PC", or a "top of the range PC" but how do you define that? Does it have 1MB of RAM? 2? 4? low latency overclocked RAM?

If they are actually comparing the SAME item year-on-year, as I've heard is the case, then it's a disgrace.

Does anyone have any specifics?

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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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