MSE News: Record inflation hike: could interest rates soon rise?

Former_MSE_Natasha

This is the discussion thread for the following MSE News Story:

"The one percentage point increase raises the possibility of the Base Rate rising earlier than expected ..."

Read the full story:
Record inflation hike: could interest rates soon rise?

These threads have been merged to avoid duplication. Thanks to HammerSmashedFace for the original post.

HammerSmashedFace

That's a fair spike, wonder how they are going to continue to 'print the fake recovery' on the back of this. Ineteresting times ahead.



http://www.statistics.gov.uk/cci/nugget.asp?ID=19

peterg1965

At least we have avoided stagflation! That is some upturn over the last few months.

chucky

VAT up 2.5% - shocker

mitchaa

chucky wrote: »

VAT up 2.5% - shocker

I didn't think the VAT rise on the 1st had any impact on these figures Thought that was next month?

HammerSmashedFace

chucky wrote: »

VAT up 2.5% - shocker

Regardless, 4% jump in RPI in 6 months is fairly large, and have I missed something or did VAT rise in January and therefore not in these figures ?

chucky

mitchaa wrote: »

I didn't think the VAT rise on the 1st had any impact on these figures Thought that was next month?

HammerSmashedFace wrote: »

Regardless, 4% jump in RPI in 6 months is fairly large, and have I missed something or did VAT rise in January and therefore not in these figures ?

it's not a shocker then :eek:

it's as expected though. isn't it?

Spartacus_Mills

chucky wrote: »

it's not a shocker then :eek:

it's as expected though. isn't it?

Where's that graph from Chucky ?

HammerSmashedFace

Love that graph chucky, looks like 'they' expected anything from another apocalypse to another boom.:D

Sir_Humphrey

The VAT increase and train fare increases came in Jan 2010 - so assuming the inflation figures are by calender month they will not affect the December inflation figure.

The explanatory note is interesting, suggesting that the sharp rise is due to deflation the previous December. Also note the "housing depreciation" AKA HPI comment.

The fact that inflation has increased is evidence IMHO that the economy is expanding again after QE. I doubt inflation would occur unless the economy were growing.

I doubt this will influence the BoE MPC yet, but if this turns out to be a trend rather than a statistical blip, I think we can expect the MPC to be playing interest rate catch-up by late spring and early summer. Wait and see.

chucky

Spartacus_Mills wrote: »

Where's that graph from Chucky ?

the November Bank of England inflation report, it's assuming £200b of QE.

they only seem to produce these projections every few months. August was the previous one.
http://www.bankofengland.co.uk/publications/inflationreport/ir09nov.pdf