Tuesday, January 20, 2009

Cpi 3.1% Rpi 0.9%

Inflation falls by less than expected

UK inflation fell in December by the most since 1992, although still came in higher than expected. CPI fell from 4.1% to 3.1%, higher than the estimated 2.7% consensus from economists. RPI, which is often used to set wages and benefits, had a big fall from 3% to 0.9%

Posted by little professor @ 12:57 PM (1966 views)
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12 thoughts on “Cpi 3.1% Rpi 0.9%

  • little professor says:

    The biggest factor was the cut in VAT from 17.5% to 15%, the ONS said. Falling petrol prices and discounting in shops before Christmas also helped reduce the rate of inflation.The biggest discounts were in clothing and footwear, with prices falling 10.3%.

    Transport costs also fell as a result of falling petrol and diesel prices, although air fares and coach fares were both up.

    The plunge in the wider RPI rate, from 3% to just 0.9% was dramatic, reflecting the fall in mortgage rates. RPI inflation could well be negative by the middle of this year.

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  • george monsoon says:

    Try telling this to my gas supplier, electricity company, insurance company and ASDA!

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  • RPI should be RIP for pensioners.

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  • Well we’re not really bothered about them!

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  • mark wadsworth says:

    Low inflation is a good thing, or so we’ve been told all these years. And now it’s a bad thing all of a sudden?

    The rampant inflation of the 1970s only worked because of currency controls – the extra coins and notes and numbers on bits of paper stay within the UK borders.

    That’s why easy money in Japan did not lead to inflation over the last ten years, because they didn’t have currency controls and all that money went to USA, Australia and so on – in a bizarre way, the Japanese ‘exported’ inflation = inflation in US and ANZ house prices.

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  • little professor says:

    Great point mark.

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  • Looking at the Fed’s reserves data as of the 14th there was $881bn in circulation and $848bn in Fed deposits – i.e. there is liquidity, it’s just confined to the small circle of Banks & Fed – back and fourth. Compare the numbers to those pre-Lehman bankruptcy when there was $815bn in circulation and $6bn in reserves (I think the running figures a while before were usually between $1bn and $2bn).

    If something happened causing this to defrost rapidly (Obama?), then the rush to get involved in all sorts of markets will cause massive hyper-inflation. It’s a scary prospect (although the potential may not be so great this side of the pond because the banks here probably got as much out of sterling as they could already).

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  • ^^ sorry, read “the banks here got out of Sterling as much as they could already”

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  • japanese uncle says:

    I stopped buying the Daily Mail, except on Wednesday and Sunday (containing Money Mail pages), to punish its arrogance and complacency demonstrated in the form of (yet again) increase in its price from 45p to 50p. Anyway I am begining to be fed up with the daily barrage telling us how stupid/crazy Amy Winehouse can be. Everyone must share the pain of deflation.

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  • @japanese uncle – Don’t buy it at all, it really is a load of refuse juice.

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  • stillthinking says:

    I hope that the jump upwards in airline ticket prices wasn’t due to the fact that the plane is only full when it leaves the UK, and empty on the way back.
    More seriously, I never imagined air ticket prices to constitute such a major portion of any inflation measurement.

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  • so the economist predictions were wrong again ???????????

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