CPI Up to 3.7% RPI Up to 4.8%

Blacklight

You just know how this is going to unfold in the housing market:

• Interest rates will rise 0.25% making buggеr all difference to your average persons mortgage.
• Panic stricken buyers wives will force them to make a purchase *now* before rates rise any more as well as blaming them for not having found a place, moved in and decorated before interest rates went up.
• The ever lasting crash-a-holics will be forecasting that a 0.25% spells doom for the market even though prices have started to rise due to the sudden influx of hen pecked purchasers.

Really2

Graham_Devon wrote: »

I don't agree, and going over the same points every week is getting boring

I thought Insurance, going up was a new point (raised by you)? but you seem unwilling to talk about a rate rise will lower it.:)

I can see why people think rates should go up, but no one seems to be able to tell anyone if increasing rates will cause inflation to fall.
Then secondly no one seems willing to say where rates need to be to lower inflation yet not damage the economy?

If people think it is the right economic solution you would hope they would have an Idea of what can be done?

wotsthat

Graham_Devon wrote: »

I don't think we can simply continue to just simply do nothing and observe. We've done that. We've observed if we do that, inflation just keeps on increasing.

The BOE are in a difficult position and their poor forecasting record hasn't helped their credibility. I also think that some of the committee are enjoying the media coverage too much and playing to the gallery.

It's not quite fair to say they've done nothing - they've consistently said that inflation will come down as a result of measures other than interest rates and rises are not needed in the short term.

What I think they'll do is to hint at increased rates to placate the vocal media but hold off for as long as possible.

Any rise will be small and have no effect on inflation.

Generali

This is the statement accompanying the numbers from the NSO:

CPI annual inflation – the Government’s target measure – was 3.7 per cent in December, up from 3.3 per cent in November.

The largest upward pressures to the change in CPI annual inflation between November and December came from:

• air transport, where fares rose slightly more between November and December 2010 compared to the same two months a year ago. However, the main driver for the upward contribution was due to the weight for air transport being higher in 2010 compared to 2009. This means that the sharp rise in air fares between November and December this year (41.8 per cent) had a larger upward impact on the CPI compared to a year ago
  
• fuels and lubricants, where prices increased this year by 2.8 per cent, the largest rise for a November to December period since 1996. Petrol and diesel prices both rose by more than a year ago reflecting a sharp rise in the price of oil between November and December 2010. The price of petrol, as recorded by the CPI, stood at £1.22 in December 2010, a record high
  
• gas, where average bills rose this year due to some of the major energy suppliers increasing their tariffs in December 2010. Average gas bills were unchanged between November and December 2009
  
• food, where prices, overall, rose this year by 1.6 per cent, the largest ever rise between a November and December period (between the same two months last year, prices increased by 0.8 per cent). The largest upward effects came from a wide range of products, most notably from vegetables, bread and cereals and milk, cheese and eggs

The largest downward pressure to the change in CPI annual inflation between November and December came from:

• furniture and furnishings, where prices, overall, rose by 0.6 per cent between November and December this year compared with an increase of 4.2 per cent a year ago. The smaller rise this year is mainly due to prices increasing by far less than usual ahead of the January sales period for most types of furniture

In the year to December, RPI annual inflation was 4.8 per cent, up from 4.7 per cent in November. The main factors affecting the CPI also generally affected the RPI. The most significant exception was air transport, which had a downward impact on the RPI but an upward impact on the CPI (mainly due to the different weights used in the RPI and CPI). Additionally there was downward pressure from house depreciation, which fell between November and December 2010; this component is excluded from the CPI.

RPIX inflation – the all items RPI excluding mortgage interest payments – was 4.7 per cent in December, unchanged from November.

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in November was above the provisional figure for the European Union. The UK rate was 3.3 per cent whereas the EU’s as a whole was 2.3 per cent.

So food, fuel and transport (fuel proxy?) are up. It's hard to see how increasing interest rates would bring down inflation there unless you increase them by enough to increase sterling and bring down inflation of these goods which are mostly imported. That would be a pretty painful process.

Graham_Devon

JonnyBravo wrote: »

Don't worry Graham, EMED will see us right. Just pull up the ladder behind you will you ol' chap.

I bought into OTC this morning after taking profits from XTR a couple of weeks back (glad I did!), based on what you have said and also based on a great post on the III board, about the value of the inferred gold etc they have.

Ready to sit on that one for a while, but enjoying EMED at the moment! Was 70% up yesterday, but haven't checked since this morning to see if it's doing anything.

RenovationMan

AD9898 wrote: »

As I've said I bought a nice house in the mid to late 90's on my own with a poor salary, my mortgage rate was 7.7% and I coped fine.

Are you still living in that house?

StevieJ

RPI was as expected (4.8%) and CPI was 0.3% worse, does that mean that housing costs have reduced?

JonnyBravo

Graham_Devon wrote: »

I bought into OTC this morning after taking profits from XTR a couple of weeks back (glad I did!), based on what you have said and also based on a great post on the III board, about the value of the inferred gold etc they have.

Ready to sit on that one for a while, but enjoying EMED at the moment! Was 70% up yesterday, but haven't checked since this morning to see if it's doing anything.

Sorry for O/T folks.

Well done on exiting XTR. I know nothing about it so can't comment on how I'd have played it.
Getting a bit miffed about OTC and it's non-delivery of the resource upgrade. December missed, to Early January missed, and now no word of when. Will continue to hold until news one way or the other.
EMED flat despite a selling day, admittedly not in large volume though. Continue to hold til news of the AS and then re-assess on an hourly basis (if I can) as spikes are likely around then.

Generali

StevieJ wrote: »

RPI was as expected (4.8%) and CPI was 0.3% worse, does that mean that housing costs have reduced?

Different treatment of transport costs apparently. They haven't released the breakdown of the figures yet.

System

I still can't see what difference an IR rise will make to inflation, especially the ~0.5% people are talking about.