MSE News: Inflation in surprise fall but prices still rising sharply

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Pressure on the Bank of England to raise interest rates eased today as inflation showed an unexpected fall in June ..."

Read the full story:

Inflation in surprise fall but prices still rising sharply

PaulChelt

"The ONS says a sharp fall in prices of games, computer consoles and high street electrical products such as televisions and digital cameras outweighed another rise in food prices."

Oh, well, that is okay then, I buy TVs, games and consoles every week! :mad:
It is spiraling out of control but being hidden by stupid price wars. My shopping has increased by more than 50%.:(

talexuser

Well the establishment obviously think Mervyn is doing such a good job keeping to his remit of 2% for over 2 years that he deserves a knighthood!

Or maybe it's a long overdue recognition for his spectacular success in overseeing the regulation of BCCI all those years ago!

Maybe if the country went bankrupt we can reward him with a seat in the Lords... lots of expenses available there for doing nothing much

lvader

talexuser wrote: »

Well the establishment obviously think Mervyn is doing such a good job keeping to his remit of 2% for over 2 years that he deserves a knighthood!

Lucky for us that he knows what he is doing and not blindly following the 2% target! 2% inflation with a 2.5% VAT increase is pretty close to deflation in real terms.

Sceptic001

lvader wrote: »

Lucky for us that he knows what he is doing and not blindly following the 2% target! 2% inflation with a 2.5% VAT increase is pretty close to deflation in real terms.

According to the Office for National Statistics the VAT increase in January 2011 added an estimated 0.76% to CPI inflation...

http://www.statistics.gov.uk/pdfdir/cpinr0411.pdf

MoneySaverLog

RPI has only dropped 0.2% to 5% in June.

lvader

Sceptic001 wrote: »

According to the Office for National Statistics the VAT increase in January 2011 added an estimated 0.76% to CPI inflation...

http://www.statistics.gov.uk/pdfdir/cpinr0411.pdf

There is really no way of knowing what inflation would have been had VAT not been increased. They are merely guessing, the actual effect of the VAT increase is more easily calculated and well above 0.76%.

Stompa

PaulChelt wrote: »

My shopping has increased by more than 50%.:(

Over what period though.....?

Sceptic001

lvader wrote: »

There is really no way of knowing what inflation would have been had VAT not been increased. They are merely guessing, the actual effect of the VAT increase is more easily calculated and well above 0.76%.

That makes no sense. The ONS didn't "guess", they calculated the effect by looking at the basket of items included in the CPI. Not all items in the basket are subject to standard rate VAT (eg. food, children's clothes, public transport, gas, electricity etc.). Unless they are wrong and you are right (where are your workings?), I would prefer to go with their estimate.

CLAPTON

MoneySaverLog wrote: »

RPI has only dropped 0.2% to 5% in June.

RPI (retail price index) increased by 5% in june compared to one year earlier

lvader

They also provide cpi and rpi ex vat, these are not estimates but real figures.