Entrenched inflation

Wookster

Just for the unbelievers... specifically you Rochdale:


http://www.ft.com/cms/s/0/bb986078-fcd8-11dd-a103-000077b07658.html

Inflation is more entrenched than many economists had imagined, easing only marginally in January as the weaker pound pushed up the price of imports and offset much of the benefit of lower fuel and housing costs.

The article goes on to say:

Meanwhile, food price inflation, remained very strong at 10.1 per cent, only a modest drop from the 10.4 per cent rate in December. Economists at Goldman Sachs said the rise in core inflation might reflect a faster pass-through of higher import prices than many had expected.

pickles110564

Wookster wrote: »

Just for the unbelievers... specifically you Rochdale:


http://www.ft.com/cms/s/0/bb986078-fcd8-11dd-a103-000077b07658.html



The article goes on to say:

!!!!!! come back and dump this useless username.

Rochdale_Pioneers

Well on the food inflation piece I can only say what I see. You buy a fixed basket of the same SKUs (Shop keeping units ie an individual product and pack/size, like PG Tips 80s) and I don't doubt that the prices are going up.

You shop around and be a deal !!!!!, and sub your usual pack/brand for the alternative on deal, and the prices are going down. The Supermarkets are bricking themselves about how to respond to the depression. That means a large increase in deep deals and a massive switch away from multibuy deals to single price points. To make up the cash they lose on those deals they put the prices up on other SKUs.

So - show around and you've never had it so good. Keep buying the same basket of products in Waitrose and you will pay more.

ad44downey

The government make the inflation figure up to suit. That's why they have at least 2 different measures. They use the one they want in a vain attempt to give credence to their disastrous ecomomic policies.

Rochdale_Pioneers

ad44downey wrote: »

The government make the inflation figure up to suit. That's why they have at least 2 different measures. They use the one they want in a vain attempt to give credence to their disastrous ecomomic policies.

Tell you what. Take whatever measure of UK inflation you feel comfortable with, and compare it with whatever measure of inflation you are happy with in the last recession.

Is inflation now a lot lower? Or a lot lot lower? Or about a third? However you take todays numbers Inflation is massively lower than the rates that crashed the UK into recession into 1990.

Thrugelmir

But house prices are dropping so if this was included in a basket measuring inflation then wouldn't the index would be negative meaning that we are in a deflationary period.

chucky

Rochdale_Pioneers wrote: »

Tell you what. Take whatever measure of UK inflation you feel comfortable with, and compare it with whatever measure of inflation you are happy with in the last recession.

Is inflation now a lot lower? Or a lot lot lower? Or about a third? However you take todays numbers Inflation is massively lower than the rates that crashed the UK into recession into 1990.

please don't feed the troll

Wookster

Thrugelmir wrote: »

But house prices are dropping so if this was included in a basket measuring inflation then wouldn't the index would be negative meaning that we are in a deflationary period.

The problem has been that there are several different 'baskets'.

The RPI which includes rental & mortgage costs is now at 0.1% (I'm not sure what else this includes).

The CPI which does not include rental & mortgage costs is 3% and this is the rate of inflation that the Bank of England is remitted to target.

One could theoretically construct an infinite number of baskets of goods to calculate inflation in different ways, however what is clear is that different basket ingredients are behaving quite differently and it seems that the BoE strategy is to try and inflate asset prices which imo is absolutely the wrong thing to do as we won't begin to see a return to normality without asset prices bottoming out. (Would you as a banker lend against falling collateral?)

cogito

Rochdale_Pioneers wrote: »

Tell you what. Take whatever measure of UK inflation you feel comfortable with, and compare it with whatever measure of inflation you are happy with in the last recession.

Is inflation now a lot lower? Or a lot lot lower? Or about a third? However you take todays numbers Inflation is massively lower than the rates that crashed the UK into recession into 1990.

Or the even higher rates that crashed us into recession in the 1970s but that was under a labour government so it doesn't count.

Fortunately we have Broon in charge who keeps telling us that his first job on becoming Chancellor was to deal with the high rate of inflation bequeathed to him by the Tories. What he forgets is that inflation was 2.6% at that time.

itsnever2lateisit?

Rochdale_Pioneers wrote: »

Tell you what. Take whatever measure of UK inflation you feel comfortable with, and compare it with whatever measure of inflation you are happy with in the last recession.

Is inflation now a lot lower? Or a lot lot lower? Or about a third? However you take todays numbers Inflation is massively lower than the rates that crashed the UK into recession into 1990.

Not really possible to compare like with like, the items in the RPI 'basket' are different now to what they were in 1990. Inflation is what folk perceive it to be. I notice that shops are much quicker/smarter at changing prices these days, I notice that as shoppers have traded down the stores have upped the prices of the cheaper brands, eg Tesco 'Value' bread was 30p at the turn of the year, it is now 45p, 50% increase, that has nothing to do with increased costs, and everything to do with Tesco profiteering.

Indeed some products are falling in price, and it is these that hold current RPI down, but I cannot afford a 32" LCD TV each time I buy a can of Baked Beans, just to achieve RPI of 0.1%;)

Wookster

Rochdale_Pioneers wrote: »

Is inflation now a lot lower? Or a lot lot lower? Or about a third? However you take todays numbers Inflation is massively lower than the rates that crashed the UK into recession into 1990.

What does that mean? That Labour is better than the Tories?

Do you realise that we are only a small way into this depression and still have an extended period to run so whatever numbers you might see now, they are likely to be significantly different in two years.