Inflation

lypsey

It says that this was prior to the last inflation report which was very high


http://www.ft.com/cms/s/fd276a5a-b240-11db-a79f-0000779e2340.html

The bank will find it hard to stop this inflationary cycle , interest rates HAVE to rise. This will be the death of the housing market

Generali

Possibly. Keynes got it right when he said that markets can stay inflated longer than you can stay solvent.

lypsey

Generali , please explain your post

Also clearly the banks are worrying about interest rates now

http://www.thisismoney.co.uk/mortgages/mortgages/article.html?in_article_id=417007&in_page_id=58

free4440273

...in other words 'this time is NOT so different' as we all knew anyway. death of the housing market? probably not. very soon a buyer's market? more than likely. interest rate rises on the agenda both here and in the states? certainly. savers to be rewarded? yes (and about time too). hope everyone has a really good weekend

roswell

But as the Christmas maddness is over there is no reason to suggest inflation hasnt fallen to below 3% since the report and you will only know the answer to that when the next report comes out .. march is it ?

ManAtHome

February - that's why it was "unexpected" when they raised rates in January.

free4440273

...it certainly has not fallen when i go out shopping with my missus. but you're right: miraculously inflation will have shaved a .25 percentage point by next month. then the BofE can reduce rates by .50 points the following month. then the housing market can continue its double digit growth. then folks can carry on spending into oblivion. recession? stagflation? yen carry trade? dollar/oil crisis? to think that we we were all suggesting such things at one point! rock n' roll! - let the good times - and the debt - continue.

Jon211

free4440273 wrote:

...it certainly has not fallen when i go out shopping with my missus. but you're right: miraculously inflation will have shaved a .25 percentage point by next month. then the BofE can reduce rates by .50 points the following month. then the housing market can continue its double digit growth. then folks can carry on spending into oblivion. recession? stagflation? yen carry trade? dollar/oil crisis? to think that we we were all suggesting such things at one point! rock n' roll! - let the good times - and the debt - continue.

Nominal prices need to fall by 0.5% just for inflation to remain at 3% as last January they fell by 0.5%. If prices remain static between Dec 06 and Jan 07 we will see CPI at 3.5%
I suspect that this won't be the case because of the January sales, but I wouldn't be at all surprised to see CPI moving above the 3% barrier.

free4440273

Jon211 wrote:

Nominal prices need to fall by 0.5% just for inflation to remain at 3% as last January they fell by 0.5%. If prices remain static between Dec 06 and Jan 07 we will see CPI at 3.5%
I suspect that this won't be the case because of the January sales, but I wouldn't be at all surprised to see CPI moving above the 3% barrier.

...in addition to my previous post above, i would not be surprised either. in fact i would not be surprised to learn that real inflation is actually closer to, say, 5-5.25 per cent. But honesty has long been anathema to the BofE

Generali

lypsey wrote:

Generali , please explain your post

This will be the death of the housing market

House prices are very high by any kind of historical measure and so should really fall IMHO. However, prices in asset markets can remain irrationally high or low for extended periods of time. JM Keynes (the economist) lost a fortune in the bond market betting on rationality.