inflation

purch

Unless we enter a period of excessive Wage Inflation, it will be difficult for the headline inflation rate to stay this high for long.

Milarky

saxmund wrote: »

Milarky, when house inflation was high, interest rates were low - which probably kept mortgage repayments fairly stable (although for most of that period RPI was higher than CPI). Don't forget that house inflation also only affects the mortgage payments for people who move house; for others the mortgage payment only depends on the interest rate they're paying.

So 'depreciation' is tied to the fact that the average mortgage is shrinking in part due to severe restrictions on re-mortgaging - reducing the 'weight' in the overall RPI of 'mortgages' as a 'retail' item? Therefore in 12 months time this reduction should plateau off and any further discount from 'depreciation' disappear?

The_Dangerman

wombat42 wrote: »

Sure commodities are likely to be subdued for a year or two. But there could be a bad crop harvest next year - who knows. Commodities are very volatile. In the long term, inflation could be back with a vengence.

Of course, anything COULD happen, but my point is the chance of inflation staying high is not "as likely" , as it is to reduce.

It would be like backing a 3-horse donkey at the races. Yes, all the other horses COULD fall over leaving the outsider to take the race, but it's not likley to happen.

Same is true of inflation, yes we could have a globally bad harvest, hurricanes disrupting oil supplies and any other disasters, but doesn't mean the BofE shouldn't plan for the most likely outcome and continue to cut interest rates.

Scrundog

It makes me smile when the experts today are saying we could have zero inflation by this time next year I now reccession can have an effect on things but the last time I heard the world was running out of oil I cannot see how the oil price can collapse for such a long time ,there will be big demands from China and the Arabs may cut production this must lift inflation as prices feed through ,to say inflation will just stop is risky

altocumulus

Here's a wee snippit from the BBC web site on the current inflation http://news.bbc.co.uk/1/hi/business/7669841.stm

altocumulus

Milarky wrote: »

National Statistics inflation nugget (found it)

CPI +0.5% @ 5.2% to September
RPI +0.2% @ 5.0% to September
RPIX + 0.3% @ 5.5% to September

The main reason for RPI (used from wage negotiations and annual benefit unprating) falling behind the others it indices is that it is currently being flattered because:

"there was a large downward contribution from housing with the main effect coming from house depreciation partially offset by buildings insurance"

Blow me over, but I never recall all that house appreaciation over 8 or 10 years coming up as a reason why the RPI was so low all those years?

Next month's figures out on 18 November (5 weeks today)

September's RPI, used for setting pension/benefits in 2009; pure coincidence there's a reason why it's not higher.... :rotfl:

fullstop

We have seen small petrol price falls the last couple of months, but what about utility bills they just keep on rising, Gas up 49%.9 this year alone and no sign of any price reductions there.

aardvaak

panic wrote: »

as inflation has now reported to have risen to 5.2% does this mean that the BoE may need to raise the base rate?

Lets hope so!

casper_uk

Don't worry Mr king said inflation should peak at 4% a few months ago!..... oh hang on a minute....

Fella

The MPC couldn't care less about inflation. They do what Brown tells them to do, which is why with inflation a whopping 2.2% above target rates are being LOWERED & suddenly we're told it's because they're targetting "what inflation will be in two years time".

Funny how a couple of years ago, when inflation was much lower, they forgot all about "two years time" & set the rates according the what inflation was at the time. Very conveniently, that also allowed them to keep interest rates artifically low.

Anything to keep that 'ol house bubble going until the next election.