Sunday, April 13, 2008

Short term weakness?????

Pound Declines Against Euro Amid Rate Speculation

Can someone please tell me what the ECB use to measure inflationary pressure and how it is dfferent for the BoE? I cannot see how/ why inflation in Club Med is so much higher than in the UK when the euro is so strong, surely basic economics would show that a weaker currency woud infact mean that The UK would have much higher inflationary pressure than the Eurozone, or does the ECB include HPI?????? AN EXPLANATION WOULD BE WELCOME.

Posted by bystander @ 06:40 PM (1176 views)
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17 thoughts on “Short term weakness?????

  • Perhaps it’s because we’re run by a bunch of lying pigs who manipulate the statistics to there own ends?

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  • A large factor for inflation is salary increases, and while the UK has millions of immigrants keeping UK wage pressure down, countries like Germany don’t and their labour market is starting to get tight. If labour supply is tight, that gives the unions/employees more bargaining power and therefore you tend to get above inflation rises that outpace productivity growth. Productivity growth, or in simple terms getting more done per worker, is the only way you can have rising salaries without stoking inflation. If German exports slow, then unemployment will go up a bit and the labour supply will get less tight, bringing down inflation.

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  • little professor says:

    What some call a “strong euro” is really “a weak dollar,” …. The ECB’s refusal to follow the Fed in cutting interest rates has helped fuel the euro’s 18 percent surge against the dollar in the past year. The euro has risen only 8.6 percent against a basket of currencies from its main trading partners.

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  • Pecker I asked for an explanation for the different view points of the BoE and ECB. If you do not have a helpful or intelligent response please do not post.

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  • The Hamburger Standard, techieman. Brilliant……….. You couldn’t make it up.

    The ECB are big boys now (theythinks) big players and loving every moment of Sterling’s decline, giving credulity to the euro, amongst a basket of dodgey currencies. Methinks they are playing on good fortune and time will tell the game they are in.

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  • Pound goes up, pound goes down, pound down further maybe, pound goes up… get the picture.. who cares!!

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  • There have been times pecker when you have posted some good personal reflections and made insightful comments , but you are now sounding like a little boy trying to get cause trouble. Have fun. Oh and with regards to the decline of sterling I care, as should anyone concerned about inflation in the UK.

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  • Well, sitting here in Germany with a wad of euros in my metaphorical pocket and looking for a property to buy in the UK (after things have settled down a bit), I care very much. Sterling’s plummet has already added a bedroom to my future home. Another 10 cents, and I’ve got a second bathroom!

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  • The ECB uses the same CPI measure that the Bank of England uses.

    I expect the answer is that the Club Med countries would have even higher inflation if it wasn’t for their strong currency.

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  • Thank you jonb, although this doesn’t explain why the UK seems to have such low inflation in comparison to the Eurozone. Have you any ideas, surely we all buy the same things from many of the same sources???

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  • Seenitallbefore says:

    the eurozone is made up of 6 or 7 different inflation zones,

    so that while inflation is probably 5% plus in Ireland Italy and spain it is less than 2% in Germany and Netherlands

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  • Its so simple, much like every Brit, we are told inflation is 2.5% & the Office of Ststs says its true of course its not 2.5% but the Office of Stats is a government office & it does what its told like the B of E & the rest of the sheep.
    In Euro zone they have a little more between the lugs.

    Its a fiddle

    Acetip

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  • We in the UK are told inflation is 2.5% by the B of E & the Office of Stats so it must be true BAAAAAAAA, another sheep in the line.
    Of course its not but these institutes are told by this shower in power to tell the masses this to keep them quiet.

    In the Euro zone they have a little more between the lugs.

    Acetip

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  • bystander, is it possible that strong inflows of migrants from eastern Europe have kept a lid on inflation over the past few years? They certainly drive down the price of services, and by working in shops and supermarkets they help keep a lid on the price of goods too. Also the Pound’s fall against the Euro is very recent – price increases take months to filter through, while retailers try to decide whether the currency shift is temporary or permanent.

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  • the northerner living in oz says:

    9. pecker said…
    Pound goes up, pound goes down, pound down further maybe, and pound goes up… get the picture.. Who cares!
    ————————————————————————————-

    Well there a few thousand expats around the world collecting U.K state pensions.
    Are now receiving 10 to 20 % less than they were a year ago.

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  • Hear Hear!!! Northerner living in Oz. Preaching to the choir there!

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