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Government Data For Inflation Rate Released

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http://uk.biz.yahoo.com/16102007/140/infla...-stay-hold.html

Tuesday October 16, 11:02 AM

Inflation Figures Stay On Hold

Falling gas and electricity bills have kept inflation below the Government's 2% target for the third month in a row, despite rising oil prices and food costs. The Consumer Prices Index was unchanged at 1.8% in September - its lowest rate since March last year - figures from the Office for National Statistics showed.
That was less than the 1.9% predicted and it offers possible hopes of an interest rate cut.

Tractor production increased by 300% in September.

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I don't know about anyone else but my gas and electric costs have'nt changed for over a 18 months in fact the've increased my electric by £1 each month (npower dual fuel) and they are pretty high on uswitch for cheapest fuel???????

lowering gas / electric prices have kept infalation down, what is all that about?? I don't see it yet

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Thanks to 2 million+ workers from Eastern Europe and billions of ££ worth of cheap rubbish from China and India. What about the trade defecit Gordon, real unemployment figures or people in permn full time work paying more than £5.50 per hour.

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As Tuffers pointed out on the other CPI thread - prices are still rising, albeit less than expected/anticipated/anecdotally reported

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This is trully a miracle.

Can Golden Brown do no wrong.

The housing market is crumbling and Gordon's career is on the line. IF he can show inflation is below the 2% mark he can drop IR in the hope of repeating August 2005 which saw HPI pick up again. Without HPI his entire miracle goes--unless the sheeple can keep borrowing and MEWing there is no stimulus available to keep goods moving off the shelves and with dropping sales comes dropping jobs. It all stands or falls on HPI.

IMO recession is a certainty. The US are trying to overvalue the Euro to buy time but it cannot work in the long term as the ECB will react by dropping IR to regain competitivernss in the global market. The problem is that inflation is preventing them from doing so which presents a nasty dilemma. Do they keep IR and the Euro high and let Ireland and France go into recession or do they cut and risk inflation and a run on the Euro? As Warren Buffett said--there is a global bubble in just about all of the commodities, not just HPI which will have to adjust. Get ready for a big bang anytime soon.

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Guest Popalot
The housing market is crumbling and Gordon's career is on the line. IF he can show inflation is below the 2% mark he can drop IR in the hope of repeating August 2005 which saw HPI pick up again. Without HPI his entire miracle goes--unless the sheeple can keep borrowing and MEWing there is no stimulus available to keep goods moving off the shelves and with dropping sales comes dropping jobs. It all stands or falls on HPI.

IMO recession is a certainty. The US are trying to overvalue the Euro to buy time but it cannot work in the long term as the ECB will react by dropping IR to regain competitivernss in the global market. The problem is that inflation is preventing them from doing so which presents a nasty dilemma. Do they keep IR and the Euro high and let Ireland and France go into recession or do they cut and risk inflation and a run on the Euro? As Warren Buffett said--there is a global bubble in just about all of the commodities, not just HPI which will have to adjust. Get ready for a big bang anytime soon.

RB, as one of the wisest men on this site, do you think he will do this? And if so will he not predict that some at least of the financial media (let alone the City) will see that the game is up and the pound will plunge. I can see Ambrose's headline:

"Brown risks reinflating bubble" The Brown/Balls apparatchicks on the MPC today outvoted the governor Mervyn King in an uncanny epeat of August 2005..... Should we see this as one of the more irresponsible things which Brown has done since selling all our Gold? The pound has taken a plunge against all major currencies reflecting concern that the government has intervened to help an ailing housing market, and that further desperate cuts are to follow.

:(

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I don't know about anyone else but my gas and electric costs have'nt changed for over a 18 months in fact the've increased my electric by £1 each month (npower dual fuel) and they are pretty high on uswitch for cheapest fuel???????

lowering gas / electric prices have kept infalation down, what is all that about?? I don't see it yet

Mine too :angry:

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RB, as one of the wisest men on this site, do you think he will do this? And if so will he not predict that some at least of the financial media (let alone the City) will see that the game is up and the pound will plunge. I can see Ambrose's headline:

"Brown risks reinflating bubble" The Brown/Balls apparatchicks on the MPC today outvoted the governor Mervyn King in an uncanny epeat of August 2005..... Should we see this as one of the more irresponsible things which Brown has done since selling all our Gold? The pound has taken a plunge against all major currencies reflecting concern that the government has intervened to help an ailing housing market, and that further desperate cuts are to follow.

:(

I think I am in the majority camp on economic issues recently. Listening to Bloomberg, MSNBC etc. the most common phrase in response to questions about what is going to happen next is "we don't know." I agree with Buffett's global view that there are a lot of bubbles that need to pop and that "everything" is in a bubble--including the "sacred" metals.

However, I do not think it takes a lot of wisdom to see that the pound is coupled to HPI and that the days of HPI are coming to a sticky end. As long as Gordon can keep IR up the pound will remain, as EAs would say, "Bouyant." With his legacy in doubt he may cut IR in an attempt to keep HPI moving and to allow the pound to drift down to parity with the Euro which will facilitate his EU integration vision for our future.

I believe we are headed for recession. HPI is over and its just a question of how hard and fast will it fall. IMO, Great Crash 2 will do most of its work at the front end which means we could see some dramatic IR cuts in the months ahead. The pound will fall but this will be explained as a necessary policy to regain competitiveness and to facilitate an eventual adoption of the Euro--if the Euro can survive a recession--it is so far untested.

Bottom line: too late for Brown to rescue his house prices. If he cuts IR too much to try to restimulate the housing market the pound collapses and inflation kicks into high gear as we are so dependent on imports and export less and less. He is between a Rock and a hard place.

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even if cpi was 1.8% surely this is still at the upper end of the range so wouldn't merit an interest rate cut? why do the media all have it in their head that anything under 2% is good?

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even if cpi was 1.8% surely this is still at the upper end of the range so wouldn't merit an interest rate cut? why do the media all have it in their head that anything under 2% is good?

Because the target is 2% over a 2 year horizon. It should stay between 1 percentage point either side of 2% in the near term (i.e. between 1% and 3%).

1.8% CPI inflation is good, and below target.

But 1.8% inflation is a total farce, and from what's been said by those reading the BBC article, no one believes it!

Edited by Jason

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Does this mean public sector workers can get proper pay increases now?

I doubt they will get a proper pay increase for about ten years at least now. The public sector pay party is over. Well and truely.

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IMO recession is a certainty. The US are trying to overvalue the Euro to buy time but it cannot work in the long term as the ECB will react by dropping IR to regain competitivernss in the global market. The problem is that inflation is preventing them from doing so which presents a nasty dilemma. Do they keep IR and the Euro high and let Ireland and France go into recession or do they cut and risk inflation and a run on the Euro? As Warren Buffett said--there is a global bubble in just about all of the commodities, not just HPI which will have to adjust. Get ready for a big bang anytime soon.

Spain and Ireland are of little consequence in the big picture as far as the ECB is concerned - France of more consequence. And anyway, a cut in interest rates to devalue the Euro would simply fuel inflation further so it isn't on the cards.

Edited by margesimpson

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Guest d23
The US are trying to overvalue the Euro to buy time but it cannot work in the long term as the ECB will react by dropping IR to regain competitivernss in the global market.

how are they doing that RB?

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BoE between a rock and a hard place

Cut interest rates, pound falls and inflation rises, needing a rate rise back and more to compensate, wage spiral begins, economy goes to recession.

Keep Interest rates level, pound level maintains against dollar, falls against euro, inflation rises with fuel and food costs anyway, Gordon not impressed

Raise rates, Pound rises,Inflation controlled, HPI gone, economy to follow. Gordon brakes his jaw with large intake of breath.

Hmm, plus there is no subprime here.

Everything is Ok then

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how are they doing that RB?

1. Talking it down and not intervening in the market.

2. Cutting IR

3. Being honest about the state of the housing market. Did you listen to Bernanke's speech today?

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Spain and Ireland are of little consequence in the big picture as far as the ECB is concerned - France of more consequence. And anyway, a cut in interest rates to devalue the Euro would simply fuel inflation further so it isn't on the cards.

Agree. France, Spain and Ireland (Italy?) will have to grin and bear it as Germany is doing just fine with IR the way they are--for now. The ECB are stuck in hiking mode as inflation is rising. Germany just reported 2.4% inflation which is not good for lower IR. Imbalances will build and something must, as it always does, give.

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BoE between a rock and a hard place

Cut interest rates, pound falls and inflation rises, needing a rate rise back and more to compensate, wage spiral begins, economy goes to recession.

Keep Interest rates level, pound level maintains against dollar, falls against euro, inflation rises with fuel and food costs anyway, Gordon not impressed

Raise rates, Pound rises,Inflation controlled, HPI gone, economy to follow. Gordon brakes his jaw with large intake of breath.

Hmm, plus there is no subprime here.

Everything is Ok then

Whilst the banks are borrowing £132 BN from the ECB, I can't see them doing anything other than what they (ECB) do.

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