Inflation rises to 3.5% (or falls to 3.6% for the rose tintacle brigade!)

gagahouse

Graham_Devon wrote: »

Core inflation removed volitile price items. Such as food, alcohol, tobacco, energy etc

So basically measures price consistent items which don't jump around as much. However, it also means very little to your average Joe who is effected by those very prices.

Thankfully, economists have now suggested this increase is just a blip.Another blip, but just a blip.

There's a good reason why economists look at core inflation - to determine if there are 'second round effects' , something which very much affects your average Joe.

Core YoY CPI came in at 2.5%, previous month was 2.3%. Don't see any signs of inflation becoming 'embedded' (large gap between PPI input and output as well as small March PPI output core of 0.1% MoM) yet so your average Joe can relax about it for the moment.

Generali

One measure of inflation has risen by the smallest possible amount and another has fallen by the same. The difference is a rounding error.

For a start, RPI and CPI stats do not capture the spending of the rich, pensioners and people 'mostly dependent on state benefits'.

Is CPI above target? Undeniably. Is inflation high? No, IMHO. Certainly it's not high enough to be considered a problem. It's slightly higher than the average since Jan 2000, not a period where goods inflation has been considered a problem.

pinkteapot

When wages are frozen, any amount of inflation is bad.

Generali

andyroberts1967 wrote: »

What's core inflation? is it a mixture of RPI and CPI?
It's very confusing with all these indicators. I know that RPI includes housing costs and CPI doesn't, which I guess explains why the two indicators are always very close together.

The other difference is that the RPI is calculated using an arithmetic mean whereas CPI is calculated using a geometric mean. That is the main reason that CPI is almost always less than RPI. The exception would most likely be if interest rates were rising fast.

Graham_Devon

Generali wrote: »

Is CPI above target? Undeniably. Is inflation high? No, IMHO. Certainly it's not high enough to be considered a problem. It's slightly higher than the average since Jan 2000, not a period where goods inflation has been considered a problem.

Depends how you look at it.

The BOE have set out targets and policy on inflation being below or at 2% by the end of the year. (for however many years running now!) The government have therefore set out budgets and spending surround this (in parts).

The national minimum wage now has as much buying power as it did in 2004, at 2012 prices, thanks to inflation.

Many many many people are on wage freezes, if not small incriments.

Inflation has apparently led to the biggest drop in living standards in 60 years according to the institute of financial studies.

ILW

Whats Mervs excuse this time?

Generali

Graham_Devon wrote: »

Depends how you look at it.

The BOE have set out targets and policy on inflation being below or at 2% by the end of the year. (for however many years running now!) The government have therefore set out budgets and spending surround this (in parts).

The national minimum wage now has as much buying power as it did in 2004, at 2012 prices, thanks to inflation.

Many many many people are on wage freezes, if not small incriments.

Inflation has apparently led to the biggest drop in living standards in 60 years according to the institute of financial studies.

What would you do about it? The with inflation isn't an increase in the money supply as the money supply is falling. Increasing interest rates would simply cut the money supply further but that's fighting the wrong battle.

It would have an uplift on the £ vs other currencies but the pound would have to rise hugely to have any sort of meaningful impact on inflation.

Graham_Devon

I'd stop pretending it was temporary for a start. The way the BOE have dealt with it, in a public facing way is an absolute shambles.

Generali

Graham_Devon wrote: »

I'd stop pretending it was temporary for a start. The way the BOE have dealt with it, in a public facing way is an absolute shambles.

What do you expect the BoE to do though?

Lots of people (not just here) seem to be of the opinion that you dial up a base rate and get an inflation rate back. It simply doesn't work like that.

Graham_Devon

Generali wrote: »

What do you expect the BoE to do though?

Lots of people (not just here) seem to be of the opinion that you dial up a base rate and get an inflation rate back. It simply doesn't work like that.

I've already stated. They could stop making announcements and pretending it's all temporary.

I'm not expecting them to increase base rates if that's what you are asking? It's too late. They could have done more a few years ago, but that's hindsight.