MSE News: Inflation hits five-year low

nicko33

Generali wrote: »

Hi nicko33,
What are those numbers predictions of please?

the headline RPI year on year figure

Generali

nicko33 wrote: »

the headline RPI year on year figure

So is the argument once the interest rate cuts are stripped out of the figures RPI will trend back to where it was a year ago?

I would have thought it would be more likely that RPI would trend towards CPI once the big interest rate changes are gone. I guess that doesn't factor in house price rises in the meantime so what you say sounds reasonable.

We'll see I suppose. I struggle to see big increases in inflation given the excess capacity that must be building in the world's economy right now. The fall in the pound reducing the buying power of Brits may mean inflation is imported. I have doubts given that I think pricing power for sellers jsut isn't there at the moment.

nicko33

Generali wrote: »

So is the argument once the interest rate cuts are stripped out of the figures RPI will trend back to where it was a year ago?

not so much that it will go back to what it was a year ago, but that the inflation in other areas will no longer be masked, so the inflation in "things" that we have seen over the course of the year to date (jan-today) becomes more visible.

my trend of guesses up to 3.3% is mostly just an extension of what we have seen YTD (with slightly slowing inflation), compared with Oct-08 to Jan-09

Generali

nicko33 wrote: »

not so much that it will go back to what it was a year ago, but that the inflation in other areas will no longer be masked, so the inflation in "things" that we have seen over the course of the year to date (jan-today) becomes more visible.

my trend of guesses up to 3.3% is mostly just an extension of what we have seen YTD (with slightly slowing inflation), compared with Oct-08 to Jan-09

Fair point.

I don't see retailers having pricing power to push through price rises TBH, especially as manufacturers don't have an abundance of healthy retail markets to sell into. Time, as ever, will tell.

kennyboy66_2

Generali wrote: »

Fair point.

I don't see retailers having pricing power to push through price rises TBH, especially as manufacturers don't have an abundance of healthy retail markets to sell into. Time, as ever, will tell.

I'd agree although food & energy price increases will tend to get passed on regardless.

Generali

kennyboy66 wrote: »

I'd agree although food & energy price increases will tend to get passed on regardless.

I agree.

Retailers of those things are buying at market price and selling on with little or no mark-up (I think petrol retailers claim to have no mark-up on the fuel the petrol is a way to get people to visit their convenience store) so they have little choice but to pass on price increases.