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Cpi Hurt Us When Housing Was Rising, Now It Hits The Government


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Just a thought, what is the effect of targetting CPI rather than RPI if prices fall?

CPI excludes the major owner occupier costs compared to RPI. So targetting CPI inflation didn't prevent House price inflation - because it wasn't in the figures.

If prices start to fall, that won't figure either.

So CPI could be 3% if food, oil, etc rise, and the BoE would have to raise rates further and further during a period of significant recession.

Walking away from the 2% CPI target would be very politically damaging for this Prime Minister...

Ooh, I better they never thought that far ahead when choosing to ignore high prices by targetting CPI instead of RPI.

Funny how things work out... sorry Gordon, Tony got the benefits, you will take the flak!

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Walking away from the 2% CPI target would be very politically damaging for this Prime Minister...

Not really it is the MPC who are responsible for tracking the target.The latest thinking is that yes CPI will rise to 3% plus this spring but will fall dramatically in the medium term and it is a medium term target.This medium term excuse always comes out,as in 2005 when the housing market was slumping.And if inflation stays over target for months ,as before,they will pretend it was a miscalculation not ''walking away'' the B*****ds.

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Not really it is the MPC who are responsible for tracking the target.The latest thinking is that yes CPI will rise to 3% plus this spring but will fall dramatically in the medium term and it is a medium term target.This medium term excuse always comes out,as in 2005 when the housing market was slumping.And if inflation stays over target for months ,as before,they will pretend it was a miscalculation not ''walking away'' the B*****ds.

At the current CPI / RPI spread that would put RPI at around 5% ( http://www.statistics.gov.uk/cci/nugget.asp?id=19 )

Expect blackouts and three day working weeks

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Not really it is the MPC who are responsible for tracking the target.The latest thinking is that yes CPI will rise to 3% plus this spring but will fall dramatically in the medium term and it is a medium term target.This medium term excuse always comes out,as in 2005 when the housing market was slumping.And if inflation stays over target for months ,as before,they will pretend it was a miscalculation not ''walking away'' the B*****ds.

Its the government that sets the target, If they wanted to relax, they could, the BoE would just adjust to the new target.

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they'll do whatever they want - most sheepie wouldn't notice anyway...

to right.

That's why they will get cameron in saying something to the effect of CPI is a lie...turn the sheeple on the government as the houseprices come down.This leaves labour with no option but to inflate wages like the 70's(with comparable public sector strikes) or concede defeat in the next election.

People know full well that the mortgage rates/food/bills and so on ARE rising fast.What they don't reckon on is the next piece of sleight of hand to bring in a new deflator under the auspices of being a "fairer" measurement.

Personally I wish the police would just impeach the whole lot of them and lock em up without parole.

I'll personally organise a whip round for the weekly bar of soap they need for "showertime" :P:P:P

they've spent so much time butt-******ing the public it's about time they had a taste of being on the receiving end!!

Edited by oracle
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Doesn't RPI contain mortgage costs? I can imagine RPI falling below CPI.

That would really leave Brown strung out.

There is RPI, RPIX and RPIY, only the first includes mortgage costs. Depends which one we are talking about.

All Items Retail Prices Index excluding Mortgage Interest Payments (RPIX) Table (RPIX) back to June 1975. Also known as the 'Underlying rate of inflation'.

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Just a thought, what is the effect of targetting CPI rather than RPI if prices fall?

CPI excludes the major owner occupier costs compared to RPI. So targetting CPI inflation didn't prevent House price inflation - because it wasn't in the figures.

If prices start to fall, that won't figure either.

As house prices start to fall, the line will be:

1. House prices went too high because interest rates were too low.

2. Interest rates were too low because CPI was flawed, because it didn't include house prices.

3. We must now put house prices into CPI, so we can avoid this problem in future.

Thereby killing two birds with one stone - an excuse for the old problem (CPI was flawed) and a solution to the new problem (keeping CPI down in the face of rising food, fuel etc)

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As house prices start to fall, the line will be:

1. House prices went too high because interest rates were too low.

2. Interest rates were too low because CPI was flawed, because it didn't include house prices.

3. We must now put house prices into CPI, so we can avoid this problem in future.

Thereby killing two birds with one stone - an excuse for the old problem (CPI was flawed) and a solution to the new problem (keeping CPI down in the face of rising food, fuel etc)

Agreed. Anything deflationary will miraculously appear in the basket - including house prices. Will it save the market, though?

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There is RPI, RPIX and RPIY, only the first includes mortgage costs. Depends which one we are talking about.

All Items Retail Prices Index excluding Mortgage Interest Payments (RPIX) Table (RPIX) back to June 1975. Also known as the 'Underlying rate of inflation'.

I meant the first one.

Anyway, actually mortgage costs will rise if inflation means the BoE need to raise rates. The value of the equity is excluded in all variants of RPI I think?

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  • 442 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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