Monday, November 12, 2007

Inflation

Inflation data to reveal effects of high oil prices

With oil prices rising towards $100 a barrel and gold challenging its record of $850 a troy ounce set in 1980, there are mounting fears over the implications for the global economy.This week brings vital inflation data, expected to reflect the impact of record oil prices, as well as retail spending data as concern grows over the outlook for consumers.

Posted by jason @ 05:39 AM (848 views)
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5 thoughts on “Inflation

  • I understand that the last time oil spiked, its basket weighting was lowered so that future spikes would have less effect.

    (Well, the Bank of England has to maintain the illusion somehow …)

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  • I do remember that its basket weighting was raised after the last spike to maximise the effect of decreasing fuel prices on the inflation figures.

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  • For the last few months, the higher price of a barrel of oil has been somewhat offset by the relationship between the Dollar and Sterling. In effect, because of the exchange rate, a barrel of oil is still costing the same as it did a couple of years back (in Sterling terms). We are now seeing some weakening of the strength of the Pound and this is what will have a real inflationary effect. Being a net importer of consumer goods, the country relies very heavily on a strong Pound. Look at this and then you will be able to know where inflation is headed.

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  • dohousescrashinthewoods says:

    I don’t hold much hope for the inflation figures. If it’s up it’s because there’s a reason Grabber Brown wants it to go up.
    CPI has taken its place alongside Santa Claus, the Tooth Fairy, George Bush’s claims about democracy and Hanky Panky Bernanke’s claims the housing market was bottoming out.

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  • planning4acrash says:

    Bingo, the exchange rate has softened about 10% of the rise in oil prices in dollar terms. Our economy will have to absorb the other 90%.

    The dollar has depreciated about 10% in the last couple of months whilst oil prices have almost doubled.

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