King Faces A Point Of Embarrassment.

[Guest Charlie The Tramp]

King faces a point of embarrassment.

By Dan Atkinson

Financial Mail 11 February 2007

A tiny price movement equivalent to one hundred thousandth of one percent on the inflation rate could make all the difference to the Bank of England this week.

With Government statisticians crunching cost of living numbers to six decimal places, the slightest rise could force Bank governor Mervyn King to explain what went wrong.

At present, the official Consumer Prices Index, which is rounded up or down to one decimal place, is balanced on a knife edge at an annual rate of three percent in the 12 months to December.

Should Tuesday`s figure covering the 12 months to January show the rate up at 3.1 percent, then the Bank`s Monetary Policy committee ., the body that sets interest rates, would have officially failed to meet the Government`s inflation target.

This is for a two percent annual rate, with one percentage point leeway either side.

If the rate moves more than one percentage point above or below its target , King must explain to Gordon Brown what went wrong and how he and his eight MPC colleagues plan to put it right. Last week`s MPC decision to leave rates at 5.25 per cent was taken with advanced knowledge of the January cost of living figures. But while some may assume this means inflation has remained at three per cent or even fallen, others were not so sure.

Asked whether the CPI could breach the three per cent level, Dhaval Joshi, strategist at investment bank Societe Generale, said: “ I think there is a high chance of it rising.”

He added that current price rises may be showing a delayed reaction to soaring energy costs towards the end of last year.

Trevor Williams, economist at Lloyds TSB, said of inflation: “It is still going up. They will be lucky if the peak has passed.”

But David Kern, economic advisor to the British Chamber of Commerce, forecasts inflation to stick at three per cent., though he expected a rise in the base rate.

The Office for National Statistics publishes Inflation numbers to one decimal place, meaning that a 3.049 rate would appear as three per cent, letting the MPC off the hook.

Pushing up the CPI, along with transport costs, has been the price of furniture, household goods and recreational items.

[Guest mattsta1964]

King faces a point of embarrassment.

By Dan Atkinson

Financial Mail 11 February 2007

A tiny price movement equivalent to one hundred thousandth of one percent on the inflation rate could make all the difference to the Bank of England this week.

With Government statisticians crunching cost of living numbers to six decimal places, the slightest rise could force Bank governor Mervyn King to explain what went wrong.

At present, the official Consumer Prices Index, which is rounded up or down to one decimal place, is balanced on a knife edge at an annual rate of three percent in the 12 months to December.

Should Tuesday`s figure covering the 12 months to January show the rate up at 3.1 percent, then the Bank`s Monetary Policy committee ., the body that sets interest rates, would have officially failed to meet the Government`s inflation target.

This is for a two percent annual rate, with one percentage point leeway either side.

If the rate moves more than one percentage point above or below its target , King must explain to Gordon Brown what went wrong and how he and his eight MPC colleagues plan to put it right. Last week`s MPC decision to leave rates at 5.25 per cent was taken with advanced knowledge of the January cost of living figures. But while some may assume this means inflation has remained at three per cent or even fallen, others were not so sure.

Asked whether the CPI could breach the three per cent level, Dhaval Joshi, strategist at investment bank Societe Generale, said: “ I think there is a high chance of it rising.”

He added that current price rises may be showing a delayed reaction to soaring energy costs towards the end of last year.

Trevor Williams, economist at Lloyds TSB, said of inflation: “It is still going up. They will be lucky if the peak has passed.”

But David Kern, economic advisor to the British Chamber of Commerce, forecasts inflation to stick at three per cent., though he expected a rise in the base rate.

The Office for National Statistics publishes Inflation numbers to one decimal place, meaning that a 3.049 rate would appear as three per cent, letting the MPC off the hook.

Pushing up the CPI, along with transport costs, has been the price of furniture, household goods and recreational items.

You've gotta admit Charlie

The whole bloody thing is a sham!

To be fair to Merv, he always seems to have a look of semi embarrassment and resignation on his face, like he knows damn well what an utter fekkn joke the MPC is

[Ash4781]

I wonder what RPI will be......

[Guest mattsta1964]

I wonder what RPI will be......

I wonder what the real inflation rate is?

Try getting a straight answer to that question from a banker or a politician

You can't!

[Guest Charlie The Tramp]

To be fair to Merv, he always seems to have a look of semi embarrassment and resignation on his face

I must admit he has a hidden body face language, always makes me look upon him as Mr seven per cent fixed.

[Guest Alright Jack]

You've gotta admit Charlie

The whole bloody thing is a sham!

To be fair to Merv, he always seems to have a look of semi embarrassment and resignation on his face, like he knows damn well what an utter fekkn joke the MPC is

couldn't agree more! his manner always strikes me as "hey, don't ask me. i only work here."

i'm glad someone else has noticed this.

[Realistbear]

You've gotta admit Charlie

The whole bloody thing is a sham!

To be fair to Merv, he always seems to have a look of semi embarrassment and resignation on his face, like he knows damn well what an utter fekkn joke the MPC is

IMO the BoE needs to be independent. Step one: remove all of Gordon's plants. Step two--allow Merv to nominate candidates that must be approved by Parliament.

My guess is that Gordon has been working on CPI to come in at 2.9.

[Guest Charlie The Tramp]

My guess is that Gordon has been working on CPI to come in at 2.9.

He can work on it as much as he likes but any sign of inflation increasing is an invitation to companies to steam in. When inflation is low companies still get increased costs which they are unable to pass on to customers as they have no excuse. You can bet no company increases their prices only at the higher inflation rate. Most of my vast increased earnings were always at the time of high inflation, hence, how inflation can spiral out of control, the reason why it must be nipped in the bud quickly by increased IRs. Fiddling the figures can eventually put you in serious trouble.

[Fancypants]

He can work on it as much as he likes but any sign of inflation increasing is an invitation to companies to steam in. When inflation is low companies still get increased costs which they are unable to pass on to customers as they have no excuse. You can bet no company increases their prices only at the higher inflation rate. Most of my vast increased earnings were always at the time of high inflation, hence, how inflation can spiral out of control, the reason why it must be nipped in the bud quickly by increased IRs. Fiddling the figures can eventually put you in serious trouble.

quite right, but its been a long while since a British government (or indeed, its people) has had long term wellbeing as one of its concerns.

Of course, there is a very strong argument to be made for the latest inflationary surge being partly the result of 2-3 years of fiddled figures. Fact is, the ONS don't have enough fingers to plug every hole in the dyke (no jokes, please)

[Sinking Feeling]

Looks like they will have to come up with a new measure of inflation- one that removes all those items that are going up in price.

[Guest Alright Jack]

Just looking at the kind of conversations that take place on HPC these days is leading me to believe that very few members actually believe in the concept anymore

I think this is a major step in the right direction in at least creating a more apt discussion about what is really going on in the UK today regarding our currency and this magnificent build-up of debt.

House prices are as fictitous as the CPI. To bet against HPI with your hard earnt paper money is just insanity in my humble opinion.

I'm not saying go and buy a house. What I'm really saying is that maybe HPC needs to accept that the monetary system is screwed and that the idea of a HPC is folly when you consider the implications of hyperinflation.

HPC is not going to happen.

Look at Blair's property portfolio - surely the prime minister must have some inside about what is going to happen?

I have already asked to have my account deleted but to no avail. Please moderator, there is nothing here for me anymore - please get rid of my account.

[Guest Charlie The Tramp]

Look at Blair's property portfolio - surely the prime minister must have some inside about what is going to happen?

Well he did not know at the time he sold in Islington or Cherie bought those flats in Bristol which have dropped in price.

TBH I would not give a **** about a HPC if my future earnings were £20 million plus with a nice pension when I left office if I was quite happy with my recent two purchases in and around Connaught Square and was able to knock the two into one. After all they are not the type of properties the average buyer would even think about. The rich at the end of the day make their own prices when it comes to the real upmarket property.

[babnye]

Just looking at the kind of conversations that take place on HPC these days is leading me to believe that very few members actually believe in the concept anymore

I think this is a major step in the right direction in at least creating a more apt discussion about what is really going on in the UK today regarding our currency and this magnificent build-up of debt.

House prices are as fictitous as the CPI. To bet against HPI with your hard earnt paper money is just insanity in my humble opinion.

I'm not saying go and buy a house. What I'm really saying is that maybe HPC needs to accept that the monetary system is screwed and that the idea of a HPC is folly when you consider the implications of hyperinflation.

HPC is not going to happen.

Look at Blair's property portfolio - surely the prime minister must have some inside about what is going to happen?

I have already asked to have my account deleted but to no avail. Please moderator, there is nothing here for me anymore - please get rid of my account.

I've read a couple of posts from you saying you're leaving. Honestly, I am. Bye I am going. I am really. Just stop posting then! BYE

[A Fool & His Borrowed Money]

I wonder what RPI will be......

[Guest mattsta1964]

Just looking at the kind of conversations that take place on HPC these days is leading me to believe that very few members actually believe in the concept anymore

I think this is a major step in the right direction in at least creating a more apt discussion about what is really going on in the UK today regarding our currency and this magnificent build-up of debt.

House prices are as fictitous as the CPI. To bet against HPI with your hard earnt paper money is just insanity in my humble opinion.

I'm not saying go and buy a house. What I'm really saying is that maybe HPC needs to accept that the monetary system is screwed and that the idea of a HPC is folly when you consider the implications of hyperinflation.

HPC is not going to happen.

Look at Blair's property portfolio - surely the prime minister must have some inside about what is going to happen?

I have already asked to have my account deleted but to no avail. Please moderator, there is nothing here for me anymore - please get rid of my account.

No. Don't go Jack

You have made some excellent posts here and your opinion is valuable

I agree though that house price inflation is just part of the much bigger malaise that is the fiat currency system and that maybe we should start a forum dedicated to the re-establishmnet of a sound currency system. Then we wont witness this fiasco that has priced millions out of the housing market and certainly ruined millions more who have unwittingly bought into th ponzi scheme.