Tuesday, November 18, 2008

CPI & RPI latest

Consumer inflation falls to 4.5%

Official figures show that UK inflation fell to 4.5% in October, as oil prices and transport costs fell. The Consumer Prices Index (CPI) measure reached 5.2% in September. This was the highest level for 16 years. The Retail Prices Index, (RPI) the alternative measure of inflation, which includes housing costs, fell from 5% to 4.2%, the biggest fall since 2003. The Bank of England has said inflation could fall below its target of 2% next year - and might drop as low as 1%.

Posted by jack c @ 09:43 AM (1091 views)
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9 thoughts on “CPI & RPI latest

  • little professor says:

    Jebus.

    The inflation measures were so slow to pick up the huge rises in oil/gas/food prices over the last year, and even then failed to reflect how stratospheric prices were going, yet now that those prices are falling, the official inflation rate quickly drops by the largest amount ever. I’m not one to cry out ‘conspiracy’, but these figures are fiddled beyond belief.

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  • The BBC spin it as a drop in the cost of living.

    More then double the bank’s target rate and its a drop in the cost of living.

    Give me strength.

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  • Deflation will force people to repay their debts and if any spare cash, save it. Although I suspect the level of indebtness is so high, people will not be saving except perhaps for those without a mortgage or in rented accomodation provided they dont live on credit cards!The long term risk is inflation not deflation. as we know the BOE and the government are always behind the curve especially when it comes to election time. The money tap will be turned on full.

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  • c'mon correction says:

    I thought the drop would bigger than this considering the 1.5% cut. That doesn’t seem justified right now (I don’t buy BOE the 2 year target rule either).

    Banks also make their living against inflation, with rates now way below current inflation they will be even more relucant to offer any better value loans.

    If CPI doesn’t head to 1% within a few months (and RPI to 0% or worse) then it would seem that Gordon Brown’s ONS and BOE have been mis-leading and I expect that the banks will increase their margins and put their mortgage rates up again within a few months to protect profit.

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  • last_days_of_disco says:

    We need to call a spade a spade, we are about to experience deflation.

    The deflationary forces are huge. Anyone who thinks the government can reflate without ending up in a Zimbabwe scenario is fooling themselves. There are too many powerful people in the UK who don’t want that.

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  • I think its deflationary also. There are only a few things the government can do now. Push interest rates down to zero, and embark on monetary stimulus. I am ruling out any funded tax cuts. It is worth mentioning that deflation is not some abnormal increase in the value of money, but just a reflection of true value. The money is literally worth more because people are borrowing less of it. Opposite of inflation, but its not some weird freakonomic event at all. Money, if you hold it, is increasing in value. Sometimes eggs increase in value, sometimes oil increases in value, now money is.
    The government must attempt to replace the borrowing of the population, which is going to be a fairly large government debt. I think a good way of thinking of future tax rises will be that instead of paying interest on a loan you took out yourself, you pay the governments cost of borrowing instead. No escape. Just that in one situation you borrowed the money for some goal you considered worthwhile, and in the other New Labour borrowed on your behalf.
    The brain drain of the 70s was because people avoided repayment of debts taken out on their behalf.
    There is no way out now for people in debt, either they accept a lower salary and run up against the zero percent boundary on borrowing costs, or they price themselves into unemployment.

    New Labour won’t be able to borrow enough additional funds from the market for a stimulus, and if they attempt to monetise debt they will collapse the pound. Wages need to go down all round. Another view of inflation is that the real cost of the state sector is about to start dramatically increasing as they refuse wage cuts.

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  • Perhaps they’ve started including house prices!

    No deflation.

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  • Letsgetreadytotumble says:

    Food’s not gone down. It shot up when oil increased, but has not come back down.
    Example, at ASDA bacon at £2.32 raised overnight to £2.97 and is still £2.97.
    They mention supermarket meat. It’s crap. We buy from a butcher and prices are the same (high).

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  • planning4acrash says:

    I buy meat from farmers market, got whole pheasant for £3.50, chicken carcass for soup £1, got a huge Ox’s heart for £1 last week, enough for 8 meals, all organic!!!!

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