Inflation now 3.5% - not good for savers

fatbob10

I can't see anything very positive about this for savers - a lower rate tax payer has to be earning a gross interest of almost 4.4% to be standing still unless your funds are in an ISA . Not many accounts paying this kind of rate.

Lokolo

I will not be impressed if March's inflation is that high.

Screw you student loan

Reaper

Bad news indeed, but to get that in perspective a lot of that is VAT returning from the temporary 15% back to 17.5%, and so it should be lower next month. Hopefully.

StevieJ

Not bad for tax free inflation adjusted saving certificates and gilts though.

sabretoothtigger

Mr King said its temporary and the average will much lower apparently?


The turning point for me personally is March onwards and Ive been thinking about this for a year because it will be a year since rates bottomed out and other associated costs.
It should be easier to see what real inflation is when drastic measures are no longer a factor

Jonbvn

Certainly pays to have some index liked savings certificates in your portfolio. However, the consensus seems to be that this is a blip due to VAT.

StevieJ

Jonbvn wrote: »

Certainly pays to have some index liked savings certificates in your portfolio. However, the consensus seems to be that this is a blip due to VAT.

Even so tax free and RPI +1% and Merv only talks about CPI, the RPI includes housing costs that should increase from here.

rdtrdt

Jonbvn wrote: »

However, the consensus seems to be that this is a blip due to VAT.

Take a read of notayesmanseconomics's blog

"These disappointing numbers are a result of policy errors by the Bank of England and I believe it is on its way to making another one. Last month I introduced you to a rule in UK economics,all rises in inflation are initially called temporary."

Based on their actions to date, it's hard to find fault with the argument that the MPC is pursuing a debt-reflation strategy, that inflationary base-effects are greater than stated, and that it won't be a surprise when later in the year inflation fails to subside in the way the MPC supposedly believes. Look at their track record.

StevieJ

rdtrdt wrote: »

Take a read of notayesmanseconomics's blog

"These disappointing numbers are a result of policy errors by the Bank of England and I believe it is on its way to making another one. Last month I introduced you to a rule in UK economics,all rises in inflation are initially called temporary."

Based on their actions to date, it's hard to find fault with the argument that the MPC is pursuing a debt-reflation strategy, that inflationary base-effects are greater than stated, and that it won't be a surprise when later in the year inflation fails to subside in the way the MPC supposedly believes. Look at their track record.

To be fair the only way inflation will take hold is if it is ingrained by the means of wage increases (unlikely), exchange rate or commodity increases tend to be one off or temporary.

hallmark

One thing is certain. Regardless of what inflation hits, the MPC won't put up interest rates. Brown won't let them, not until AFTER the election.

Their excuse this time will be that inflation is going to fall. As previously pointed out, if inflation is low they keep rates low because inflation is low. If inflation isn't low they keep rates low because "inflation WILL be low".

Makes you wonder exactly what conditions WOULD merit realistic interest rates under Broooon. How about during a boom? Oh no, they had plenty of excuses even then why the IRs to be kept low.

Of course none of those excuses were the truth: "we need to prolong the housing boom to pay for Brown's profligate spending, regardless of the disastrous cost to the country".

D1zzy

Lokolo wrote: »

I will not be impressed if March's inflation is that high.

Screw you student loan

expected to stay in this region for a few months - according to the Beeb (quote from Merv I think)