Sunday, April 22, 2007

Smith’s sill optimistic

Inflation: far from a basket case

Fathom Consulting, using cautious assumptions about cuts in gas and electricity bills, and assuming further rises in petrol prices, says the Bank will be in possession of information showing an April drop in inflation to 2.8% when it meets next month, presaging a fall to 2% in July and just 1.2% by December. RPI inflation, now 4.8%, will be 2.6% by the year-end.

Posted by sold 2 rent 1 @ 12:05 PM (519 views)
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9 thoughts on “Smith’s sill optimistic

  • sold 2 rent 1 says:

    The weighting of energy in the CPI, that was adjusted recently, will cause the CPI to tumble.
    This will lead to the MPC to raise rates less than is required.

    Sterling will also stay high over the next 6 months.

    I think the perfect storm is brewing for inflation at the end of the year when…
    1. Sterling will fall
    2. Energy price falls will be out of the index
    3. World inflation will be increasing

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  • Who cares what the MPC does after a while….. or what “official” data it is in possession of ….. or where its “forecasts” are ( and that is dangerous if enough people start to think it of course).

    All i care about is :

    i] Do i have more or less money in my pocket
    ii] Does that money buy me more or less
    iii] When i go abroad do people accept my currency and hand me goods in return or snort with laughter and ask me for a real currency whilst taking said currency and adding it to the toilet holder for future use.

    Everything else is conversation.

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  • Agree. Denying importance of high inflation today on the basis of benign trends at year end is like saying “nice dress, emperor”.

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  • Inflation Statistics are like that old Cockney Song the Hokey Cokey:-

    You put your fuel prices in,
    Your mortgage costs out,
    In out, In out, you shake it all about
    You do the Hokey Cokey and you turn around
    That’s what it’s all about

    Trouble is that they have been fudged for so long that their accuracy to 0.1% is extremely dubious and entirely irrelevant due to everyones differing circumstances.

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  • But what of RPI?

    Being the poor economist he is, he’s ignored the MPC’s single biggest concern, using a contrived statistic like a drunk uses a lamppost.

    Wage settlements are on RPI, so secondary inflationary pressures are a dead cert.

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  • talking rot says:

    Smith just irritates the pants off me. I can no longer read his articles without shouting at the newspaper. I just hope that he is proved wrong.

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  • “Take these out of the basket and inflation would still be below 2%”

    So what David is saying is that if you take all the inflationary factors out of CPI you end up with a low inflation figure. He’s a polymath that fella.

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  • tony marshall says:

    I’ve had exchanges with him on his website and he sidesteps the issues every time you try to pin him down. Here is my comment on ‘have your say’ at the end of the article, although I would be very surprised if it gets past the censor:-

    “David, you continue to keep your head in the sand and express your views with the only remaining orifice available. I do hope that you will be man enough to admit your errors of economic judgement when they become clear to even the shoe-shine boy.”

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  • Van Hoogstraten says:

    He’s still hangin’ on in there for that “calming rate cut”. David Smith is a textbook case of the pollyanna syndrome in its advanced stages

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