Tuesday, Aug 15, 2006

Inflation remains above the governments inflation target

BBC News: Inflation eases slightly in July

Inflation fell marginally to 2.4% in July, but the figure remains above the government's 2% inflation target. The Consumer Price Index (CPI) dipped from 2.5% in June, according to the Office for National Statistics (ONS). The headline rate of Retail Price Inflation (RPI) remained unchanged at 3.3%, the ONS said.

Posted by webmaster @ 10:45 AM (535 views)
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1. waitingfor hpc said...

yeah right. On what figures? Gordon & Co are still cooking the books................. it will end in tears.

Tuesday, August 15, 2006 12:19PM Report Comment

2. paul said...

Well, hang on hpc.

The BBC has done well to temporarily cast off its ridiculous house price-centric "no need for a rise" stance on rates. Even though the inflation rate is a fiddle, it's still rising sharply as the other BBC article about factory gate inflation has pointed out.

If the MPC can see an inflationary trend then it is their duty to curb it asap. My guess is that the next rate rise will be soon, like next month soon. Which unsurprisingly will not be welcome news for the housing market outlook.

Tuesday, August 15, 2006 01:10PM Report Comment

3. sirgoogle said...

I agree with Paul.

My assessment is next month too - so we all get used to the idea before Christmas - as otherwise there will be another spree of profligate spending - and more credit card debts, no to mention the London centric crowd who always want to buy a house and "be in by Christmas" - which if not made to think hard about paying the money back will still cause yet another round of House price increases (yes - if there are no more IR rises there could very well still be several more percentage point rises before the end of the year - making it around 10% on the year - sad eh!).

It is time the country was weaned off cheap money and the attitude of "I want it now and I'll pay it back sometime in the future".

Tuesday, August 15, 2006 01:21PM Report Comment

4. inbreda said...

Given that an IR rise needs to feed through to the banks increasing their variable/tracker rates, which then has to feed through to (a limited number of) customer monthly repayments, which could tip (a number of) people over the edge, which then has to go through the denial phases and various payment defaults before they actually admit they're in a mess and approach a debt advisor, and then they have to apply for an IVA / bankruptcy, or lengthy repossession processes have to be kicked off etc etc etc

How long do you think that the effects of an IR rise take to feed through into property prices?

Any estimates?

Tuesday, August 15, 2006 01:53PM Report Comment

5. harold said...

Inbreda, quite a while. However, the last rise will have already dented the confidence of those who believe that property is an eternal money tree - another rise soon would undermine it further. At the moment it's more about sentiment. Sentiment, inlike lengthy repossession processes, is instant.

Tuesday, August 15, 2006 05:17PM Report Comment

6. Ticktock said...

Ah what a shock! Right on queue! Those guys!

Once again, CPI seems to do what ever VIs want it to doesn't it? Its a strange one, I mean, if they dont watch it people might start to think that the CPI figure is a total fraud!

Remember, inflation is 2.5%, and your house will be worth a trillion pounds in ten years, the war is going well, everyone wants to be our friend, society is rock solid, and there is definately, definately, absolutely no need to panic.

Tuesday, August 15, 2006 06:18PM Report Comment

7. Coops said...

Betfair have 11 to 1 for interest rates tot go up by 0.25 in September, might be worth a punt

Tuesday, August 15, 2006 07:33PM Report Comment

8. Northern Lad said...

We're all 10% worse off than 5 years ago!....... THANKS GORDON!!!!!

Tuesday, August 15, 2006 08:21PM Report Comment

9. bidin'matime said...

Re the time for house prices to fall - as Harold says, sentiment is instant wifey says "Shall we move house, like all our friends have done recently?" and hubby replies "No, cos mortgage rates are going up. Let's redecorate the spare room instead.." So one day there is a queue outside the estate agents and the next, no queue. Vendors ask why no viewings and agent says maybe consider a lower asking price.

It's then all down to how soon they want to sell, but some will have to sell, so will discount heavily to attract a buyer. Then the stats reflect the deals done and the falling prices and the headlines persuade more buyers to sit tight and more vendors to accept lower offers. And some BTL investors to panic and sell while they can. And the lenders get edgy and the valuers reduce valuations, so fewer people can get the mortgages etc etc.

Then people who have relied on MEWing to remain 'solvent' find they can't MEW any more (there are more out there than you would think - they don't show anywhere in the stats right now, but they will..) and you get more defaults.

And this is all possible without significant further rate rises.

The last crash got under way within a year (1990) and then took until the end of 1993 to reach almost the bottom. The start date is, as we all know, unpredictable, but my guess is that we are looking at a similar time scale. Having said that, there will always be bargains to be had and fear of further falls will encourage some to accept a low price, so there will be much fun to be had by walking into estate agents and offering silly, very silly, prices In fact, eventually buying could be something of an anticlimax

Wednesday, August 16, 2006 01:51PM Report Comment

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