Deflation? For whom?

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h.

kennyboy66 wrote: »

The reason RPI is given prominence is that it is (and has always been) the index that state benefits / pay awards have been linked to.

Ahhhh, I get it. Lets now use RPI so that we don't have to raise pensions by much, thus giving pensioners the double whammy of zero interest on their savings and virtually no increase in pension, when everything else they need/use is going up.

Then you have that McNulty t*at with his head firmly in the trough, just coming upto to breathe and use the 'Nuremburg defence' of 'I haven't broken the rules'.

Edited. To remove the violence from my post, sorry Carol:o, it just winds me up.

Wookster

mustrum_ridcully wrote: »

Yes and CPI doesn't look remotely negative to me, infact it ROSE to 3.2%! CPI rising and above 2%, so why are interest rates at 0.5% (oh yes deflation I forgot).

The BoE is clearly NOT independent anymore. Where is Mervyn's open letter to the Chancellor explaining why its preferred target (the CPI) is still over 100 bips above its desired range?

carolt

ad9898 wrote: »

h.



Ahhhh, I get it. Lets now use RPI so that we don't have to raise pensions by much, thus giving pensioners the double whammy of zero interest on their savings and virtually no increase in pension, when everything else they need/use is going up.

Then you have that McNulty t*at with his head firmly in the trough, just coming upto to breathe and use the 'Nuremburg defence' of 'I haven't broken the rules'. Being shot is too good for these scum.

Thanks bar the violent bit.

I'd prefer a serious independent public enquiry, followed by locking the man up for a good long time.

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Wookster wrote: »

The BoE is clearly NOT independent anymore. Where is Mervyn's open letter to the Chancellor explaining why its preferred target (the CPI) is still over 100 bips above its desired range?

Exactly, wasn't Merv supposed to do that when CPI breached 3% ???, why isn't this being reported.

mustrum_ridcully

Wookster wrote: »

The BoE is clearly NOT independent anymore. Where is Mervyn's open letter to the Chancellor explaining why its preferred target (the CPI) is still over 100 bips above its desired range?

At times I doubt it ever really was.

If IRs can be lowered whilst CPI rises to "save the economy" then they could have been used to tame the house price boom and make the subsequent crash less bad (that might really have helped save the economy).

carolt

Interested to see what those like dopester, Sir Humphrey etc, who IIRC were great believers in the oncoming 'deflation' problem, think of today's figures.

StevieJ

My council tax has not increased :T

thriftybabe

carolt wrote: »

http://www.telegraph.co.uk/telegraph/multimedia/archive/01369/2103_Real_cost_1369124a.pdf

Excellent table here, published 19 March 2009 in the Telegraph, that shows exactly what is going down in price - and what isn't.

It's interesting that - with the exception of petrol costs, which will affect most people - provided they drive - virtually every other essential has actually gone up - in the case of a lot of essentials, by a huge perecentage.

The only thing that's gone down - by a lot - is the cost of mortgages.

So it seems that all this kerfuffle about deflation applies primarily to homeowners (yes, rents are falling, but not by the kind of percentages as mortgages).

So homeowners who MEWED to buy a gas-guzzling 4X4, according to stereotype, and who coincidentally, pay for several internet connections and eat lots of eggs, will have lower costs.

But for the rest of us - those who didn't have huge/any mortgage costs to start with and drive economical cars - prices are still going UP.

So can someone explain again why we've reduced interest rates to the lowest for hundreds of years, why savers are being shat on, why we're throwing billions of pounds of our (and our children's) taxes at 'fixing' the problem, when it doesn't appear there's much of a problem to fix?

Wouldn't it be cheaper to just help out a few people who over-borrowed on their mortgages, rather than sacrificing everyone?

It seems to me that lowering interest rates is now creating exactly the deflationary spiral it was supposed to prevent, as today's headlines about pay freezes/pay cuts to come for millions, due to the fact that pay is based on RPI (including mortgages) not CPI, demonstrate.

Obviously, once these pay cuts start to bite, then the problems will really start - not only are prices still rising, but people will have less to pay them with.

It doesn't make any sense.

No mortgage - so no change there. Price of shopping seems to be going up all the time! Savings rates going down. Wages going down.

Having done what we thought was right by paying off mortgage, making sure we have savings, putting into our pension and running our company very efficiently is having no benefit to us at the present time. We certainly have a lot less in our pockets on a monthly basis due to our lack of work but at least we have no debt to pay.

kennyboy66_2

carolt wrote: »

No - it hasn't escaped me. My point - that the supposed 'deflation' only applied to those with big mortgages on tracker rates, and/or very heavy petrol users, appears to have escaped you, however.

£780 a month for a mortgage ?

Is that a big mortgage ?

Thats less than I am paying on a 4 bed semi bought in 1999.
I would struggle to rent a 3 bed terrace for anywhere near that.

Per the Telegraph table, that mortgage has fallen by £125 / month, which implies a paid interest rate changing from about 6% - 4.5%

So it would seen, that it's neither a "big mortage" nor a tracker paying 2%.

StevieJ

ad9898 wrote: »

h.



Ahhhh, I get it. Lets now use RPI so that we don't have to raise pensions by much, thus giving pensioners the double whammy of zero interest on their savings and virtually no increase in pension, when everything else they need/use is going up.

.

I think the pensioners are due/received a pay rise of 5% (based on RPI Sept) not a bad half of a double whammy