Wednesday, March 24, 2021

CPI down from 0.9% to 0.7%

[CPI] Inflation Down To Only 0.7% - is DEFLATION close? Bad for House Prices?

Deflation ebbing ever closer, effect on house prices - time to panic? Stagflation is now a real fear for the UK

Posted by Data Dave @ 12:05 PM (1457 views)
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2 thoughts on “CPI down from 0.9% to 0.7%

  • LandOfConfusion says:

    Depends on how you measure deflation. Deflation in wages is generally bad for any asset brought with debt but deflation in asset prices OTOH can be good for HP’es as it causes interest rates to fall -> less spend on interest so more for capital.

    On other point and shooting from the hip here (I haven’t gone over the data in detail yet) it looks like they haven’t captured the usual picture as stores have been closed and they’ve apparently tried to minimise the travel & social contact of their data collectors. Also I have concerns about their recording of energy & water prices; both have increased for myself + extended family but have stagnated in the ONS survey (?). And add to that food prices have risen and I’m seeing more and more subscription services with RPI+% increases in their yearly contracts. But I guess hardly anyone has a mobile phone or Internet contract these days so.

    And no mention of the price hikes on goods from Europe? Or did I miss that too?

    And it’s not just us, I’ve also been getting hints from people in the US that the same kind of ‘deflation’ is happening there too. Many people seeing core prices rise but official inflation statistics not following. Should be an interesting few months.

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  • Interesting points, was intrigued by your comment about the US, seems after some digging its the same story there too. They say if the US sneezes the UK catches a cold – so should we be worried?
    Yes deflation bad for wages [if inflationary linked] but then again in real terms if prices havent moved you still have the same purchasing power….
    With regards to house prices, im not sure as with ‘deflation’ usually comes a collective government response with more than policy so hard to pin point. Rising interest rates is one thing…
    Ill have to try and dig out some data linking inflation rates with HPs.

    Dave

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