4.2% Anyone ?

Graham_Devon

Just read on the guardian site that the average CPI rate over the last 6 years has been 3.2%. I.e. consistently above target.

Really2

Graham_Devon wrote: »

Just read on the guardian site that the average CPI rate over the last 6 years has been 3.2%. I.e. consistently above target.

I wonder how much of that relates to oil being $50-$60 a barrel back then.
To make that equal around the same £1 wold have to = $4 now.

No amount of hiking rates would get you near that in reality (as we would foobar the economy even after a few percent) it is all part of the emerging markets catching us up, we can't iron out these price rises by changing rates, we are being forced to suck them up.

Graham_Devon

Really2 wrote: »

I wonder how much of that relates to oil being $50-$60 a barrel back then.
To make that equal around the same £1 wold have to = $4 now.

No amount of hiking rates would get you near that in reality (as we would foobar the economy even after a few percent) it is all part of the emerging markets catching us up, we can't iron out these price rises by changing rates, we are being forced to suck them up.

We may aswell just get shot of interest rates altogether. Put them at 0% and forget about them.

Afterall, they can't be used to do anything related to what they are supposed to do...according to some.

Thrugelmir

Really2 wrote: »

So are prices are down then? or up like you said before?

Long term trend is up.

Really2

Graham_Devon wrote: »

We may aswell just get shot of interest rates altogether. Put them at 0% and forget about them.

Afterall, they can't be used to do anything related to what they are supposed to do...according to some.

So how do you make oil fall to a similar level to 2005? can it be done with rates?

do we want rates to go up again now inflation will be falling fast over the next few months?

Emerging markets are causing prices to rise as they get richer, we all have to get used to it.

Thrugelmir

Graham_Devon wrote: »

We may aswell just get shot of interest rates altogether. Put them at 0% and forget about them.

Afterall, they can't be used to do anything related to what they are supposed to do...according to some.

Markets are now beginning to influence rates not central banks.

Really2

Thrugelmir wrote: »

Long term trend is up.

Not sticking by it is currently going up then.

sheffield_lad

inflation will only be around 3% by the middle of summer and very close to 2% by the end of the year. No crystal ball like the original poster said just maths. VAT will take 0.8-1% out of the equation and although food looks to have been going up the actual rate of increase since last June has slowed dramatically.

MrRee_2

Excellent news this ..... inflation at around 3% in summer and payrises running at 7% - sounds CRACKING to me!!

oldvicar

The ultimate cause of inflation can really be said to be central banks, like the Bank of England. Their behaviour and actions determine whether inflation is allowed to rise or is kept low - in other words, whether they allow prices to rise unchecked by monetary policy, or whether the central banks seeks to influence the amount of money in the economy by changing interest rates.

Source: BoE (Education pages) http://www.bankofengland.co.uk/education/targettwopointzero/inflation/whatCausesInflation.htm

... or whether they don't just allow inflation, but actively encourage it with measures such as QE ???