Where do us savers go now then?

Lokolo

nicko33 wrote: »

"The CPI is the main UK measure of inflation for macroeconomic purposes and forms the basis for the Government's inflation target. It is also used for international comparisons.

The RPI is the most familiar domestic measure of inflation in the UK"

http://www.statistics.gov.uk/statbase/Product.asp?vlnk=868&More=Y

Now answer my second bit *whip* :rotfl:

poppy10_2

Any decent fixed rates available just now? My Cheshire 4.5% 1 year bond got in too late. Not keen on regular savers, would prefer to invest a lump sum.

nicko33

Lokolo wrote: »

Now answer my second bit *whip* :rotfl:

"What you are saying is when RPI reduces the prices reduce? If thats the case how do you go negative? [edit] is it if it goes below the Jan index??"

When (the RPI basket) prices reduce, then the Index reduces.
You get a negative RP04 when the Index this month is less than what the Index was 12 months previous (not Jan).

If the RP02 index drops by 1 per month for the next 4 reported months
the headline figure could be negative around April.
If it did that for the rest of 2009, we would end up around -5.5%

it dropped by 0.7 and 1.7 in the last 2 months

amistupid

Ken68 wrote: »

I am going to compensate for the loss of interest by packing up smoking and drinking and whoring, that'll learn 'em. :-)))))

It'll be the worse 20 minutes of your life Ken. I did it in 1979.

Old_Slaphead

poppy10 wrote: »

Any decent fixed rates available just now? My Cheshire 4.5% 1 year bond got in too late. Not keen on regular savers, would prefer to invest a lump sum.

Close Treasury - 5% for 2 years on £10k applications & money by 13/1/09.

Ruffler - 4.75% for 3 years on £5k

Personally, I won't go for 3 years - almost anything could have happened by then (apart from LibDems getting in of course)

nicko33

nicko33 wrote: »

If the RP02 index drops by 1 per month for the next 4 reported months
the headline figure could be negative around April.

it dropped by 0.7 and 1.7 in the last 2 months

it has now dropped by 0.7, 1.7 and 3.1 in the last 3 months

The BBC say
"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."
http://news.bbc.co.uk/1/hi/business/7839023.stm

but it could easily be as early as the February figures

RPI fell last January so we now need either a fall of 3.2 this Jan
but a fall of only 1.6 by Feb for a negative annual rate
(although that would probably get rounded up to 0 so a fall of 1.7 would be needed to get -0.1%)

midas100

dean_ham wrote: »

Where do us savers who havent spent beyond our means and saved over the past few years go now? Cant belive how low the interest rate has dropped over the last few months its just madness!

We took out TWO Icesave ISAs just a month before they failed (hence the nickname). Knowing that my money was safe, I didn't stop to think about the amount of interest I would actually loose if the bank went bust. It took nearly 3 months before I got the reimbursement AND the letter needed to open another ISA, that meant 2 months with zero interest for starters. By that time the rates had plummeted so we have now lost out for the rest of the year compared to the great fixed rates available when I initially started to look and was tempted by a foreign bank. Lesson learned.

LesU

nicko33 wrote: »

it has now dropped by 0.7, 1.7 and 3.1 in the last 3 months

The BBC say
"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."
http://news.bbc.co.uk/1/hi/business/7839023.stm

but it could easily be as early as the February figures

RPI fell last January so we now need either a fall of 3.2 this Jan
but a fall of only 1.6 by Feb for a negative annual rate
(although that would probably get rounded up to 0 so a fall of 1.7 would be needed to get -0.1%)

Because the average expenditure of households in Britain is so heavily influenced by their mortgage payments, the RPI has also been massively influenced by the fall in mortgage payments. The RPIX and CPI haven't fallen anywhere near as much because they don't include mortgages. Most Europeans rent and don't buy, so it isn't considered worth including house loans.
Unfortunately some of us, especially those with savings, don't have a mortgage. Our inflation rate is at least the CPI rate.
As the inflation rate has been increasingly weighed in favour of technological goods, the published number is getting even further away from reality.

nicko33

nicko33 wrote: »

but it could easily be as early as the February figures

pretty much a certainty now

King_Weasel

Lokolo wrote: »

Thats got to be wrong. If someone can confirm who is right out of me and Nick pleeease....

I have always understood inflation to change on a monthly basis depending on the consumer prices.

If consumer prices have lowered then inflation would be negative. However, inflation is currently at 4.1%, which means the economy is still inflating at a high rate, just because the change in inflation was negative, it doesn't mean that the economy is deflating. If the economy was deflating then surely inflation would go from 4% or whatever it was, straight to -2%?

I'll try and put you out of your misery. It's quite simple - honest!

Prices - on average - are LOWER now than a month ago, but HIGHER than a year ago. So it is true that we still have inflation (over the last year), but deflation (over the last month). (Prices might have risen or fallen last week, or since this morning, but no-one knows because the official figures are based on a 1-day "snapshot" in the middle of each month.)

One thing that can confuse is that people talk of inflation falling. This is NOT the same as prices falling. It means that prices are still rising, but not as fast.

Get this straight before you advance to the different ways of averaging prices - RPI, CPI, RPIX etc - discussed above. And remember that YOUR experience of inflation is not the AVERAGE experience measured by these indeces (unless you have 2.4 children etc). Right now it especially depends on whether you have a variable rate mortgage (and on whether you use Fella's station car park).

Hope this helps.