Inflation

lisyloo

StevieJ wrote: »

How do you know that? unless you know what the RPI will be in 12 months time

SteveJ - We don't know what RPI will be, but whatever it is you'll get it (and more).

blinko

I still can't see how inflation will come down on its own, especially with so much bad news on the horizon. although I do think that BOE is more concerned with growth rate than taming inflation at the present

I would actually like a 0.1% increase and then a 0.15% increase. I think this would be a great way to raise rates but not reduce growth

lisyloo

I still can't see how inflation will come down on its own

Currently the YoY inflation figures are comparing July 2011 (VAT 20%) with July 2010 (17.5%).
That means the figures are.........well inflated by the tax rise.
When we get to Jan 2012 the year on year (YoY) figures will be comparing Jan 2012 with Jan 2011 (both 20% VAT), so the temporary uplift will fall out.
If you look at the composition of inflation you can make an estimate of how much this is. I think it's about half of CPI at the moment.
Does that explain it?

P.s. the January comparison probably comes out in Feb as there has got to be a lag.

masonic

lisyloo wrote: »

If you look at the composition of inflation you can make an estimate of how much this is. I think it's about half of CPI at the moment.

Surely not half! The ONS estimate the VAT increase raised CPI by 0.76% here.

bigfreddiel

blinko wrote: »

interest rates should move by 0.25% later this year, this should help savers and theoretically reduce inflation but personally I think there are too many problems in the system and I think inflation will remain 3 - 5% for a while

rates will not rise fo 2+ months

fj

lisyloo

Yes you're probably right.
I'm talking about the proportion of CPI taken up by tax increases that are outside of the control of the BOE (about half of CPI).
The only one I know that dropping out off the top of my head is VAT.
So if we assume that VAT is the only one dropping out then lets agree on your figure of inflation dropping by 0.76% due solely to that.
I think that's a significant and very likely cause of falling CPI on it's own.
I think there will also be others but I'm happy to stick with that on it's own as an explanation for now.

lisyloo

Go on who has got the b*ll`s to make a prediction of the next few years silver price?

I have no issue with predictions, but perhaps it would be appropriate for a different thread?

Jegersmart

If you have a mortgage just pay it off ASAP - that would be the least risky option. If not, there are quite a few options depending on your risk appetitie.