Deflation Tomorrow - Poll

bdwoeriwe

UK RPI figures are out tomorrow and it seems certain that the UK will be experiencing deflation for the first time since the inter-war period.

Is this a bad thing and if so, who is to blame?

RobertoMoir

Like a lot of things, whether or not it's a bad thing probably depends on how severe it is.

ManAtHome

The figures were published yesterday http://news.bbc.co.uk/1/hi/business/7959564.stm

RPI down to 0%
CPI up to 3.2%

So maybe wage 'deflation' and essentials 'inflation'..?

rog2

'Statistics' can be used to show whatever figure is wanted. To be honest, this country talked itself into recession and 'deflation' is a consequence of that.
With 'deflation' everybody will be waiting for prices to come down even further and, therefore, nobody will be spending - leading, inevitably, to a fall off in production, factory closures and job losses. When, eventually, the economy picks up there will be a shortage of goods leading to higher prices and the 'spiral' will start all over again.
What worries me more is the fact that the consumer price index has increased by over 3%. The reasons stated include the rise in price of imported foods, due to the weakness of the pound. Retailers, especially the smaller retailers, who are already working on reduced margins are being expected to absorb these hikes, but this can only be done by reducing their costs - usually labour.
How can the politicians say that the UK is better placed than most countries, including our EC partners, to weather this recession? If that were, indeed, the case then surely the pound should not have plumetted by 30+% against the Euro?
It's certainly going to be a tough year.