MSE News: Inflation up again - will base rate rise soon?

ed123_2

...the cpi & rpi are historic figures ie tracking the last twelve months so to compare them to saving rates now ie relating to the future is misleading. It would be more accurate to compare a one year fixed saving rate available one year ago with todays cpi/rpi.

sabretoothtigger

So now we know a 1yr fix would have lost money. Todays rates arent any better either.

People arent going to put savings into the FTSE like that, they should but there is some extra planning and thought required to do such things. Those that consider it while unsure are likely to suffer nasty charges or get involved in GEB for trying to take advice from more expensive sources then MSE.

Martin cant tell people to invest not save or he'd get in trouble. I dont think he can give them investment advice.

FTSE still very cheap IMO.

It might be cheap, we dont know for sure and joe bloggs hates uncertainties. It depends what their earnings are for the next 12 months, how can ordinary people figure that one out. Why should they have to diverge from their own expertise to consider balance sheets and so on that is unfair

I dont mind, I recognise it as an opportunity that the odds are stacked towards the finance industry, I have little chance of losing money near term if im mostly right

FTSE is valued 11 times their annual earnings now. In theory you put your money into the share price and the company earns it back in 11 years

So to compare that to cash, that'd be 7% interest needed to get your money back plus the original investment in 10 years.
Right now people getting zero or less returns from savings, not even half or a quarter of what investing offers presuming 11pe is delivered in future earnings


Glossary:

Price earnings:
http://www.finance-glossary.com/terms/price-earnings-ratio.htm?id=12894&ginPtrCode=12738&PopupMode=false

Earnings per share
http://www.finance-glossary.com/terms/earnings-per-share.htm?id=454&ginPtrCode=12738&PopupMode=false

lvader

People should be happy, the difference between CPI and RPI is narrowing.

welshmoneylover

So glad I whacked a load of £££ into my index linked certs before they went!

sabretoothtigger

lvader wrote: »

People should be happy, the difference between CPI and RPI is narrowing.

Because they are both keep going up, why is that good ?


If they put up rates RPI is going to be like 10% in the end

lvader

Well if your income goes up by CPI it's good that it iesn't too far behind RPI.

By the way they said on the BBC that CPI ex VAT is 1.9%, below the BoE target.

JamesU

lvader wrote: »

By the way they said on the BBC that CPI ex VAT is 1.9%, below the BoE target.

That's 50% less than CPI = 3.7%. Not sure how they arrive at that figure, cannot work that one out myself.

But just had a thought. If 1.9% is right, then all the Governement has to do is make CPEX (CPI ex VAT) the correct measure of inflation. After all, when people cannot afford to buy anything there is no VAT to add to it is there? So CPEX is a better measure of people's inflationary experience. No need to consult with any professional bodies on this of course, it is too obvious. Problem solved, inflation reduced to target 2%, nothing to worry about.

JamesU

Milarky

Loughton_Monkey wrote: »

Don't know how you define 'Factoid', but:

FACT Balance of payments 1997 Total Goods & Services 1997 £856 million Positive [Source Government Pink Book].

How about these numbers then?

Year - BOP (£m ANNUAL current account)

1983 1258
1984 -1294
1985 -570
1986 -3614
1987 -7435
1988 -19710
1989 -25533
1990 -21562
1991 -10615
1992 -13011
1993 -12460
1994 -6801
1995 -9063
1996 -6316
1997 -962
1998 -3179
1999 -21854
2000 -25787
2001 -21102
2002 -18657
2003 -18307
2004 -24917
2005 -32841
2006 -44934
2007 -36482
2008 -23776
2009 -23854

Here's the Quarters just from 1997
1997 Q1 51 1997 Q2 703 1997 Q3 443 1997 Q4 -2159 (Total -962)

http://www.statistics.gov.uk/statbase/product.asp?vlnk=1118

The quarterly blip is shown in this graphic too


http://news.bbc.co.uk/1/shared/spl/hi/pop_ups/05/business_uk_economy_plc/html/7.stm

poppy10_2

JamesU wrote: »

That's 50% less than CPI = 3.7%. Not sure how they arrive at that figure, cannot work that one out myself.

CPI-CT is core inflation assuming constant tax rates, stripping out the effects of indirect taxes like VAT, fuel and excise duties, thus allowing a more accurate comparison between different countries with different tax regimes. CPI-CT was 1.9% in December; there is no official target. Hee's the equation if you want to work it out for yourself:

JamesU

poppy10 wrote: »

Hee's the equation if you want to work it out for yourself:

Thanks. Think I shall just accept ex-tax figures quoted by BBC.

JamesU