inflation too fall sharply

sheffield_lad

Read an article in the Investors Chronicle over the last couple of weeks.

it suggests that the vat rise put 1.3% on the monthly inflation figures and this will drop out next month & fall below 3% by this summer as the food and fuel rises drop out of the figures and be around 2-2.2% by the end of the year.

Maybe a reason why QE is being discussed ?

oops wrong too lol

RenovationMan

Looks like Graham Devon was wrong. I can't believe it.

Graham_Devon

RenovationMan wrote: »

Looks like Graham Devon was wrong. I can't believe it.

What are you on about?

Trentenders

howee wrote: »

Read an article in the Investors Chronicle over the last couple of weeks.

It took a couple of weeks to read, but you've managed to surmise this within a paletable post. Thank you.

RUN_RABBIT_RUN

yoy inflation has been tipped to come down for a while now, looks like this year might be when it finally happens

hopefully the boe will be vindicated

ChiefGrasscutter

Which means they wil have more scope for more QE which will push it back up

moneyinmypocket

Yay good news if it does happen

DervProf

So, it is assumed that there is no food inflation ?

The loaf of bread and litre of milk that I regularly buy have not increased in price, but such "luxuries" as yoghurt, margarine and canned soup have recently increased by more than 5% in some stores recently.

Obviously, with the previous VAT increase drropping out of the yearly inflation figures, there will be a short term fall in the annual rate of inflation, but it remains to be seen if the 2% target can be reached in the near term.

wotsthat

U.K. Inflation Probably Eased to 6-Month Low

http://www.bloomberg.com/news/2012-01-13/u-k-inflation-probably-eased-to-six-month-low-economists-say.html

Consumer prices rose an annual 4.2 percent after a 4.8 percent gain in November, according to the median forecast of 36 economists in a Bloomberg News survey. The Office for National Statistics in London will publish the data at 9:30 a.m. on Jan. 17. A day later, labor-market data may show the jobless rate remained at a 15-year high.
The Bank of England, which is buying government bonds to support the economy, has forecast that inflation will moderate sharply this year as a January 2011 sales-tax increase drops out of the annual comparison and energy costs decline. Retailers including Marks & Spencer Plc cut clothing prices in December, while three of the U.K.’s largest energy suppliers trimmed tariffs this week.

It was always going to work out like this. QE was never going to have the inflationary effect predicted by some given the poor state of the economy.

Unemployment high (the only factor that realistically will lead to more distressed homeowners) which will continue to keep a lid on wages.

I think Merv's got away with it!

ILW

I would love to see deflation on a few items such as fuel, food, heating, rents etc.
Apparently it would be terrible for the economy though according to some on here.

EchoLocation

So is VAT being reduced then?