CPI hits 4.4pct

Generali

LEO-3 wrote: »

Conservatives pledge pre election for a fuel stabilizer? Hopefully something on this tomorrow. The 1p rise in fuel duty will almost certainly be binned, but they need to do more and drop fuel duty too.

We need to make the £ stronger, the BOE commitee are a laughing stock.

The pound is around long-term averages against most major currencies and at or about long time lows against the Aussie and Canadian dollars.

People seem to be under the impression that inflation works like a car and the base rate is like the accelerator. Put up interest rates and you slow the car, reduce rates and the car goes faster. It isn't that simple.

Kohoutek

LEO-3 wrote: »

We need to make the £ stronger....

I thought the UK was aiming for an export led recovery, not an import led one...

lisyloo

How much would you like the price of petrol reduced?

I don't want petrol reduced.
I was just saying there is a link between interest rates, sterling and therefore the cost of foreign commodities.

This central banking lark might look like a couple of nights in a swanky hotel, a bit of a chat about the economic weather and then a vote on whether to keep rates at 0.5% or keep them at 0.5% but there may be a bit more to it than that.

No sure why I'm being got at.
I'm not calling for my Rice Krispies or my petrol to be reduced in price.
I'm was just asying there is a link between interest rates and inflation (due to both sterling and demand factors).

Personally I do now feel it is the time to act, buit not because I want my personal commodities reduced, because I think there is a risk of higher inflation becoming entrenched which isn't good for households, jobs, businesses and the general economy.
Yes, I am aware there is a great deal to it :-)

Kohoutek

LEO-3 wrote: »

Conservatives pledge pre election for a fuel stabilizer? Hopefully something on this tomorrow. The 1p rise in fuel duty will almost certainly be binned, but they need to do more and drop fuel duty too.

Perhaps you should buy a more fuel efficient car?

lisyloo

How about instead of raising interest rates, which may or may not have a significant and lasting effect on Sterling, the government should reduce the huge amount of taxation on fuel?

I am not necessarily against that, but presumably that tax currently pay for things (like hospitals, schools, roads etc.)
Where do you propose that money comes from or which services do you propose are cut?

I'm not saying I disagree, just that I think there's more to it.

Generali

lisyloo wrote: »

No sure why I'm being got at.
I'm not calling for my Rice Krispies or my petrol to be reduced in price.
I'm was just asying there is a link between interest rates and inflation (due to both sterling and demand factors).

Personally I do now feel it is the time to act, buit not because I want my personal commodities reduced, because I think there is a risk of higher inflation becoming entrenched which isn't good for households, jobs, businesses and the general economy.
Yes, I am aware there is a great deal to it :-)

My comments were meant in jest, not to be rude. I am very sorry that didn't come across to you.

The exchange rate impact on prices is often overstated. Like I say, if you double the pound then you can cut the price of an imported item when it hits Dover by 50%. Then to that you have a whole lot of other costs that have to be paid in sterling that are unaffected or little affected by the exchange rate changing (eg retail costs, financing, wages, profit).

DervProf

RenovationMan wrote: »

How about instead of raising interest rates, which may or may not have a significant and lasting effect on Sterling, the government should reduce the huge amount of taxation on fuel?

i.e. use a scalpel to operate on the UK's problems rather than a spoon?

No doubt that would reduce the cost of moving stuff around the UK, but what about the cost of importing products ?

And if taxation on fuel is reduced, what is going to replace that lost revenue ?

lisyloo

Could you explain how this link works?

If Sterling is more attractive to investors then the £ rises relative to other currencies.
If the oil price in $s (or whatever foreign currency) stays then same then we can buy more oil for our £s, so it's cheaper, but you know that.

You have also overlooked the demand side of the issue.
It it keeps getting more expensive then I will leave my car at home and cycle to work and not buy any petrol.

lisyloo

but there isnt more to it than just raising rates?

Who said that??
There is an awful lot to it.
Who is pretending there isn't??
Certainly not me.

Generali

lisyloo wrote: »

If Sterling is more attractive to investors then the £ rises.
If the oil price in $s (or whatever foreign currency) stays then same then we can buy more oil for our £s.

What you say is undeniably true. The problem us the extent of the rise required to make a material difference and the sort of rate rise needed.