Will the real rate of inflation please stand up?

Graham_Devon

StevieJ wrote: »

My experience of the rate hike was that they passed it on and some, retailers are less likely to pass on a reduction as opposed to a well publicised increase in VAT.

Stephanie Flanders and Global Investors wrong then, because of your personal experience?

Have you got any evidence? They have provided theirs. Even the BOE commented on this, and stated much the same, a while ago, when explaining how inflation would wasn't as much a concern at the time, and that VAT wouldn't have a flat percentage impact. Just can't find the article now, and I'm not gonna be searching for it all evening! So the BOE are, I assume, wrong based on your experience too?

DervProf

Mr_Mumble wrote: »

So, when you exclude a bunch of stuff from the basket (and use the dodgy CPI basket in the first place) we've still got above, the everything-included, target inflation! Staggering!

PS. LBMA silver fix at another high today. Wonder why gold and silver are going to the moon?

Did I not recently read a post by Hamish, stating that the price of gold would be lower by May ?

Something like that anyway. Maybe Hamish would like to remind us of what he posted.

Loughton_Monkey

There is no such thing as inflation.

Just people who spend more.

PeterZ_2

HAMISH_MCTAVISH wrote: »

Food prices aren't that much higher in reality, and it's mostly supermarket profiteering rather than actual imported inflation.

Watch out for the supermarkets favorite trick of making things smaller to hide price increases! Coffee and chocolate bars are a good example.

Mr_Mumble

Thrugelmir wrote: »

Tesco's is an international business with increasing revenue and earnings from overseas. So you would need a geographical breakdown from the annual accounts to extract meaningful data.

True, it'll skew the numbers as will the likes of expansion in banking. Anyhow, ignore Tesco if you wish and just use Morrisons and Sainsburys. Still no sign of margin expansion.

PS. the reason I don't own Tesco shares is that they're not as international as they make out. Their last annual report shows they get 82% of revenue and 71% of profits from the UK . They don't break down operating profits by region though (they just give the far murkier "trading profits" than can easily be manipulated) so I'm not going to hazard a guess which regions are their most profitable.

michaels

I can imagine the BoE forecast would still feature a fan...and 1.5% would no doubt be somewhere outside the 95% confidence interval!

Generali wrote: »

via FT-Alphaville

http://longorshortcapital.com/announcing-the-cpi-f-flat.htm

neverdespairgirl

I'm suspicious about this, because IIRC, inflation's been higher than the target but about to come down below it for years - and never actually made it down.

michaels

There was a recent piece (economist or BBC?) suggesting that food inflation was overstated due to a change in the retailling enviroment. Food prices are based on single units but competiotn has led to a lot more buy-one-get-one-free type promotions. This has a double impact on the observed prices, not only is the actual average selling price less than the price used in the inflation calcs but also the underlying prices are adjusted upwards to take in to account the large amount of promotional activity.

This would actually tie up rather nicely with the facts presented about namely that UK food prices as measured for inflation have been rising faster than international equivalents but at the same time retailer margins have been squeezed.