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

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  • MoneySaverLog
    MoneySaverLog Posts: 3,232 Forumite
    CLAPTON wrote: »
    RPI (retail price index) increased by 5% in june compared to one year earlier

    May RPI was 5.2%, June RPI was 5.0% am I missing something?
  • masonic
    masonic Posts: 28,148 Forumite
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    edited 12 July 2011 at 7:13PM
    MoneySaverLog wrote: »
    May RPI was 5.2%, June RPI was 5.0% am I missing something?
    Inflation is decelerating, it is not falling. The 5.2% and 5.0% are the rate of change of RPI, not RPI itself.

    Edit: In fact, RPI is stationary. The index was 235.2 in May and still 235.2 in June.
  • lvader
    lvader Posts: 2,579 Forumite
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    masonic wrote: »
    Inflation is decelerating, it is not falling. The 5.2% and 5.0% are the rate of change of RPI, not RPI itself.

    Edit: In fact, RPI is stationary. The index was 235.2 in May and still 235.2 in June.


    Inflation is still faliing, it's prices that aren't.
  • masonic
    masonic Posts: 28,148 Forumite
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    edited 12 July 2011 at 8:37PM
    lvader wrote: »
    Inflation is still faliing, it's prices that aren't.
    Inflation isn't falling, the rate of inflation is falling (if you compare figures for the % change over the past 12 months). The rate of inflation between May and June was 0%.
  • Masomnia
    Masomnia Posts: 19,506 Forumite
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    Sceptic001 wrote: »
    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. ;)

    The CPI-CT index they produce, which assumes that all taxes stayed constant, showed a 2.6% increase. Comfortably on target.
    “I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse
  • lvader
    lvader Posts: 2,579 Forumite
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    masonic wrote: »
    Inflation isn't falling, the rate of inflation is falling


    What the hell are you talking about? The percentage rate is how inflation is measured, if the rate goes down it means inflation went down.
  • masonic
    masonic Posts: 28,148 Forumite
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    lvader wrote: »
    What the hell are you talking about? The percentage rate is how inflation is measured, if the rate goes down it means inflation went down.
    Inflation is simulated by, for example, the retail prices index (RPI). The RPI certainly is not falling. The rate of inflation (or inflation rate if you prefer) is the measure of inflation and is represented by the percentage change in RPI over the previous 12 months. It is the inflation rate that is falling. It makes no sense to talk about rising or falling inflation: inflation is a concept, the inflation rate is the measure. Falling inflation would be deflation, which is a totally different thing.
  • gozomark
    gozomark Posts: 2,069 Forumite
    masonic wrote: »
    . Falling inflation would be deflation, which is a totally different thing.

    Have to disagree there - falling inflation means the rate of change is falling - deflation means prices are falling
  • masonic
    masonic Posts: 28,148 Forumite
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    gozomark wrote: »
    Have to disagree there - falling inflation means the rate of change is falling - deflation means prices are falling
    I can't agree that "inflation" means the same thing as "rate of change of inflation".
  • Ark_Welder
    Ark_Welder Posts: 1,878 Forumite
    edited 12 July 2011 at 10:03PM
    Negative inflation is deflation, i.e. prices are lower than a year before. Falling inflation is known as disinflation, i.e. prices are still rising on an annual basis, but by a lower rate than previously

    [edit] Precise meaning of the word 'deflation'? Discuss!!
    Living for tomorrow might mean that you survive the day after.
    It is always different this time. The only thing that is the same is the outcome.
    Portfolios are like personalities - one that is balanced is usually preferable.
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