Inflation hits 3%

Jon211

Generali wrote:

Interesting, or at least it beats work for now.

That's why I'm looking at them too.
I do work for a bank so at least I can claim it's related to my work, even if I do work in IT for them
Interestingly it seems that the cost of flights has had a large impact on this months inflation figures as they increased very sharply in the last month.
Once the weights are taken into account this makes up twice the amount that fuels and lubricants make up.

Generali

I'm a city back office temp/contractor myself - I might have worked with you at some point.

The weights look pretty reasonable to me - I subscribe to a few economic emails (mostly from hedge funds) and there's quite a lot about how the GDP and inflation figures in the US are messed about with for political purposes so I thought the same was likely here.

The unemployment figures seem to be the dodgy ones over here (pace rapidly rising numbers of sick when record amounts of money are being poured down the NHS drain). It's just coincidence that the target rate of inflation was set as the then lower RPIX rather than RPI. When house price inflation got too high it was changed, coincidentally of course, to CPI.

Xbigman

Latest news.

The govt has announced a new narrow inflation measure based on carrots. Professor of economics I. M. Billshickt has calculated that over a 50 year cycle the rate of carrot inflation has exactly mirrored the real inflation rate and that substantial savings could be made by only tracking this rate, and ignoring the others.
A new department, the ministry of carrotology, will be created with a £4 billion
a year budget to measure whether or not any money has really been saved.

In other news, the minister for agriculture has announced a new carrot planting initiative. Asked if this had anything to do with the new inflation measure the minister expressed the opinion that with the C4 wider carrot supply figure being static since tea time, a 200% increase in the carrot supply would have no effect on carrot prices in the mid to long term. In fact, with the looming energy crisis meaning powercuts, the expected increase in carrot consumption is more related to peoples need to see in the dark than it is cheap inflation manipulation.

Regards




X

talksalot81

Jon211 wrote:

Interestingly it seems that the cost of flights has had a large impact on this months inflation figures as they increased very sharply in the last month.

That provokes a question - will the huge air tax starting next month show up in the figures?

I realise it is a tax but it does result in the cost of air travel spiralling...

BTman

Xbigman wrote:

Latest news.

The govt has announced a new narrow inflation measure based on carrots. Professor of economics I. M. Billshickt has calculated that over a 50 year cycle the rate of carrot inflation has exactly mirrored the real inflation rate and that substantial savings could be made by only tracking this rate, and ignoring the others.
A new department, the ministry of carrotology, will be created with a £4 billion
a year budget to measure whether or not any money has really been saved.

In other news, the minister for agriculture has announced a new carrot planting initiative. Asked if this had anything to do with the new inflation measure the minister expressed the opinion that with the C4 wider carrot supply figure being static since tea time, a 200% increase in the carrot supply would have no effect on carrot prices in the mid to long term. In fact, with the looming energy crisis meaning powercuts, the expected increase in carrot consumption is more related to peoples need to see in the dark than it is cheap inflation manipulation.

Regards




X

Thank's for that, made me chuckle...:D

F_T_Buyer

Everything is coming out how I thought it would. A previous MPC member (who sets interest rates) said:

"The job of the central bank is to keep rates as low as possible, while denying there is any inflation"

I guess the game is finally up. Those who look at fuels to justify the increase are not looking at the whole picture. Oil has risen 300% of the past three years, and it causes little inflation, but now it is? Nope. The oil/commodity inflation is now filtering through the economy and into everyday items.

The reason it's not showing up now is because the government is not measuring inflation, they are measuring consumer inflation. Remember furniture, clothes, technology, food has fallen in price for years thanks to Asia and increased productivity. The central bank, along with the government has been able to deny this inflation, and people have fallen for it.

It's a total joke how economists (including Gordon Brown) blame rising fuel prices. What they fail to understand is if oil rises, people have to pay it (petrol, gas etc) hence so pay less on other items, balancing inflation. But no, they ignore it, allowing more money to enter the economy, which eventually cause more inflation later.

How high with interest rates have to go?

Did anyone see channel4 news with Ed Balls? A question was put to him:

"Why should the public sector accept 2% rise, when inflation is 4.4%"

Good question. But what people need to realise, is if they receive more wages interest rates will inevitably go higher than otherwise needed. I suppose all those who want lower interest rates will be voting with their feet, and accepting no pay rise? I doubt it.

The real answer is how much wages will you demand?

With a normal pay round, i.e. wages rise no more than 4%, I would expect interest rates to peak below 6%, and float around there. But if wages go up, the BoE will have big trouble getting the toothpaste back in the tube.

What does this mean for house prices?

Well, i'm an obvious bear. House prices are so out of line, it's painfully obvious. All I can say is any potential FTB out there have a real think if they can afford it.

If you're getting into BTL for the first time. Good luck, you'll need it.

ManAtHome

Although I prefer XBigMan's theory, for a long time, Mars Bars were a very good indicator of inflation (that was before they started holding the price and reducing the size).

As to future inflation - for the past 10 years or so we've had some powerful deflationary forces:
low interest rates from Japan (rates slightly above zero)
cheap goods from the BRIC economies (Brazil, Russia, India, China)
the "Internet effect" - lots of clicks without mortar so lower overheads

Any one of these would have moderated inflation to make up for some of the over-supply of money in both the private and public sector - going to need something pretty big to level things when any/all of these start to unwind.

pricedout_1

talksalot81 wrote:

That provokes a question - will the huge air tax starting next month show up in the figures?

I realise it is a tax but it does result in the cost of air travel spiralling...

This is a point worthy of further note. It's not just inflation that is going up .. tax is also on the rise.

Council tax is set to rise ... especially Londoners paying for the spiralling costs of the Olympics (with East London gaining the long term benefits of regeneration and raised house prices.)

Families are paying £200 more in tax since 2005, says the IFS ....
http://money.guardian.co.uk/tax/story/0,,1967435,00.html

Gordon Brown seems to have a propensity for raising taxes by stealth. Very subtle, but the most dangerous changes are probably the subtle ones that people don't notice ... untill it's too late.....

For example when he first became chancellor he concentrated on taxes that were not immediately visible or where the effect was not immediately felt, hence his soubriquet of "the Stealth Chancellor." A case in point was his abolition of the ability of insurance companies to reclaim Advance Corporation Tax. It netted the Treasury some £5bn a year, and there seemed to be no losers. Only years later did savers becoming aware of the fact that this "painless" raid on their money meant that they must save considerably more for their old age, since the returns on their pensions savings are now lower than they once thought. In this case Brown's victims are the pensioners.

And, this ladies and gentlemen, is our next prime minister.

(Gordon Brown said in his budget speech of 1997: "I will not allow house prices to get out of control and put at risk the sustainability of the recovery.")

Generali

On top of these rising taxes, borrowing by this govt is also huge (see the National Statistics website) - Gordon 'Bennett' Brown has borrowed over £130 billion on our behalf to 'invest' in consultants, NHS managers and foreign wars. This is money that will have to be repaid at some point, or at least have interest paid on it.

Each .25% rise in interest rates means an additional 325 million quid has to be found each year to pay the interest bill on Gordon's great legacy to future generations.

That sucking sound you can hear is GBB sucking your wallet dry.

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I’m actually shocked at the amount of bearish news it just keeps coming. Its as though somebody has plugged the media back in to what’s actually going on.

Some of the messages I’ve been reading on newspaper websites also shows an awakening for some people. Especially with regards the bogus inflation measures used.

CPI?


Add to that Gordon Brown has been quoted as saying 'inflation had risen because of "a trebling in oil prices and pressure in the housing market".

Well who would have thought high house prices 'brought on by specualation' would have contributed to inflation...

Take away house price inflation and what else has Gordon Brown got to show for ten years. No more 'Boom and Bust' did he once say. Well we have the boom and now we await the bust.