Tuesday, March 22, 2011

Wrong type of snow, leaves on the tracks, now we officially have “the wrong type of inflation”

Budget 2011: Chancellor to admit higher borrowing due to "wrong type of inflation"

The Chancellor will be forced to admit in tomorrow’s Budget that medium-term borrowing will be significantly higher than planned. The Financial Times reports that Budget forecasts to be released tomorrow will say “the wrong type of inflation” will squeeze Government finances and hit household incomes. The pressure on household incomes will mean income tax and National Insurance contributions will not rise as is usual in an inflationary environment while benefits and index-linked Government debt are automatically linked to inflation.

Posted by jack c @ 09:02 AM (1737 views)
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20 thoughts on “Wrong type of snow, leaves on the tracks, now we officially have “the wrong type of inflation”

  • Government realises it cannot have its cake and eat it.

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  • general congreve says:

    The future’s bright.

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  • sibley's b'stard child says:

    ‘launch a £100m pot-hole fund’

    There you go Jack, maybe I wasn’t so far off the mark re: holes in Blackburn, Lancashire….

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  • Sib’s – yep you were pretty much spot on from memory. The inflation figures are out today my prediction is CPI @ 4.4% and RPI 5.5% but I’m not sure if it’s the right or wrong type of inflation (LOL)

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  • The only type of inflation the government like is HPI !

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  • sibley's b'stard child says:

    You do realise now Jack that i’m going to suspect you of cheating re: the CPI/RPI predictions. Had you been 0.1% or so out I would have been more impressed, ironically…

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  • had to go food shopping last night , wow it was an experience at morrisons, the store was empty I asked the girl on checkout if there was a reason it was so quiet, she replied the recession mate, been quiet for weeks

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  • general congreve says:

    On BBC Business news now, “another surprise increase in inflation, the problem that just won’t go away”. The talking head from BNP Paribas that they are interviewing just talks about how he thinks it will go higher and that there are other factors that are yet to be counted (like 40% increase in easter eggs) that will skew figures higher as we go on. So far, so good, but no one mentions the role of negative real interest rates in the inflation problem, just about how raising rates my damage the recession, sorry, ‘recovery’, perhaps if they examined that it wouldn’t be so much of a f4cking surprise.

    Then again, raising rates might strengthen our currency and help quash imported inflation initially, but as the economy implodes from higher rates the currency will burn anyway. Damned if we do, damned if we don’t. So on second thoughts probably best to just stick to reporting the figures and not to discuss the sheer catastrophe of the situation, so as not to alarm the plebs.

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  • To the average household inflation is inflation, innit? Never mind the BS about the wrong sort of inflation.

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  • Inflation is inflation – our problem is that we can’t raise rates because we have the wrong type of economy.

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  • sibley's b'stard child says:

    What’s that then Timmy; fecked?

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  • Sibs – one that is prettty much dependent upon rising residential house prices closely followed by buying Chinese tat in the shops

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  • sibley's b'stard child says:

    I guess so Jack though I prefer my more technical definition; but your works almost as well.

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  • Sib’s – one thing for sure and that is the economy aint as rosy as Flashman was suggesting a little while back. Thanks for the technical analysis but your spelling was off – teachers red pen, write out ten times f00k*d

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  • GC “the plebs”? Are you really that conceited!

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  • general congreve says:

    @15 – That’s not my attitude Bellwether, it’s the government’s and their mouthpieces.

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  • Sibs – yes if you want the one-word answer… But Jack C is right, it’s built on consumer spending funded by debt secured against rising HP’s, meaning we can’t raise rates when logic says we should and when every other country is.

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  • @ bellwether – in fairness to the general I took the plebs comment as refering to the government – a member of the TSC last week publicly called savers with deposits in the Icelandic banks operating here in the UK as “morons”

    See http://www.housepricecrash.co.uk/newsblog/2011/03/blog-tsc-member-thinks-the-general-public-are-morons-32819.php

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  • GC perhaps you did mean “plebs” (as in what others think of the populace) but then you do have a habit of sensationalising things in a way that in my view undermines your point. For example it was only yesterday that I finally discovered that you see an environment of high inflation as far more probable than a hyperinflationary situation. There is a huge difference between the 2.

    My suspicion is that if you became even a little more analytical and slightly more rigorous with your thoughts, you would be posting less frequently but far better stuff than most on the site. But you (and I know you know this to be true) have a tendency to be quite lazy, and that interferes with developing your points further

    Mind you its pretty concieted of me to say this.

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  • general congreve says:

    @20 – Wouldn’t say I sensationalise things, but will concede I sometimes add a bit of flair to make my point, otherwise things would be awfully dull, wouldn’t they?

    As for being lazy, I’m not sure what you are getting at. I make my points and I make them pretty rigorously. My views have only modified ever so slightly with relation to some aspects of my thoughts on various matters (when new evidence has come to light) but to all intents and purposes my views have remained largely unchanged for the last 2 years. I think there is certainly a chance of hyperinflation and have mentioned this before, but I would err slightly more on the side of high inflation rather than hyper at this point. It really depends on the machinations of the policy makers at the end of the day and to be fair their stupidity knows no bounds, so hyperinflation could easily be on the cards.

    You are in very combative mood today BW.

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