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

Graham_Devon

wotsthat wrote: »

It's a single months data showing no change and comes of the back of 5 months of falling inflation.

The trend remains downward. Surely the one thing we've learnt in the last few years is that things don't move in straight lines.

It gets a bit more Mumsnet every day around here.

Yes it's a single month's data.

But the point is, we were not supposed to be at this level now. VAT was supposed to strip out far more than it did. Inflation was supposed to fall sharply over the year. It hasn't. It's surprised analysts for 2 months in a row (firstly falling less than expected, and then rising).

It's nothing to do with mumsnet. You are just being downright ignorant. Presumably because you are also one of those proven wrong.

Batchy

The fact is, protect an outright crash in property values, keep inflation high to inflate away the workers debt, when people have equity in their houses increase interest rates, people remortgage from the 3+ base rates they have been stuck with, back to BOE +1%... everyones happy and interest rates are about 4% again!... Net difference... nothing...

Forgetting about the banks... but we cant forget about the banks as its what drives EVERYTHING... so in the meantime we have to wait until about 2018 until they have finally sorted themselves out.

Get used to it, if you expect the politicians to come out and say this, then think again!... you have to read between the lines and trust civil servants. unfortunately!

Generali

heathcote123 wrote: »

Where do you think inflation would be if base rates were 5%? - given the effect this would have on our currency.

I think there'd be deflation. I can't put a number on it though.

ILW

Generali wrote: »

I think there'd be deflation. I can't put a number on it though.

So an increase in base rate could control inflation then. It's just a matter of how much.

Thrugelmir

Graham_Devon wrote: »

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

Unless house prices correct. Then overnight living standards will start to improve again.

Generali

ILW wrote: »

So an increase in base rate could control inflation then. It's just a matter of how much.

True.

However, as it takes about 18 - 24 months for interest rate changes to feed through to the economy in full, the MPC had to look at the balance of risks 2 years ago from different levels of interest rates.

As inflation had been nil or even negative in 2009, I can see why they'd err towards keeping rates low.

This reminds me in some ways of 606 on Radio 5 where people ring in to criticize the ref: perhaps they should have done better but then again it's a nearly impossible job. FWIW, I said during The Great Moderation that the Central Banks' belief that the occasional 25bp change in rates allowed then to keep inflation on a particular course smacked of hubris. The GFC has been their Nemesis.

wotsthat

Graham_Devon wrote: »

It's nothing to do with mumsnet. You are just being downright ignorant. Presumably because you are also one of those proven wrong.

What I'm being 'downright ignorant' pointing out there's a downwards trend, it's a very small change, and it's a single months data. Look at money supply data - that trend is likely to continue.

It can't have escaped your notice that we are not in a static economy and things have been somewhat volatile for some time.

Try this - it's right up your street.

http://www.mumsnet.com/Talk/legal_money_matters

SecondLegDownIsTheBigOne

ILW wrote: »

Whats Mervs excuse this time?

No doubt it's unexpected one off factors, but not to worry, inflation will fall sharply to exactly 2% this time next year.

Generali

StevieJ wrote: »

Doesn't CPI also include substitution which would obviously have dampening effect.

Yes it does and yes it would.

It also makes the CPI more accurate in one way as it reflects consumer behaviour. Most of us change what we buy as a result of changes in relative prices. Look at the rise of the roast chicken on Sunday at the expense of roast beef for example.

Graham_Devon

wotsthat wrote: »

What I'm being 'downright ignorant' pointing out there's a downwards trend, it's a very small change, and it's a single months data. Look at money supply data - that trend is likely to continue.

It can't have escaped your notice that we are not in a static economy and things have been somewhat volatile for some time.

Try this - it's right up your street.

http://www.mumsnet.com/Talk/legal_money_matters

It's probably escaped your notice that this dunce has been calling inflaiton correctly for the last 2 years. I was also the closest on where base rates would end up, stating 1.5% in 2008.

I don't need mumsnet thanks...and this was the ignorant part.