Inflation falls to lowest in over 2yrs

chucky

grizzly1911 wrote: »

What is your reasoning?

And there's me thinking CPI and RPI were measured by an index that has not gone down except for a brief period in 2009.

It must be the case the ONS is using a different index that has gone down that I missed. I'd love to know what it is...

sabretoothtigger

RUN_RABBIT_RUN wrote: »

i mean, 3% inflation - hardly third world, is it?

The point would be that it is not reflecting the potential for inflation.

You mention the Mugabe paradise where he issued free money to his supporters. If the war veterans had taken that money and saved it for a rainy day a year from then, no inflation would have occurred in that moment.

We have not issued money for nothing and not in cash and it wont be spent today but that inflation does exist in the system and it will rain one day and it will be like Noah's Arc.
Get building


All these stats are retrospective, it would be more suited to the nature of this forum to look ahead and avoid future costs before the expense rises


http://en.wikipedia.org/wiki/A_rising_tide_lifts_all_boats

CLAPTON

sterlingstash wrote: »

First time ever, I have to disagree with Clapton. Inflation isn't 'prices'. It is the rate of change in prices. And DG is right. If the rate of increase in airfares is now 7% instead of 27% then ceteris paribus (oh, us bl**dy economists.... it means all other things being equal or same as before) then inflation will fall. That is, the rate of price increases will fall ie a decrease in the rate of inflation.

What is important, is how our wages, or savings rates, or borrowing rates compare to inflation - ie what the real rates are.

inflation is to expand or increase


my 'i.e. prices' meant inflation of prices (as opposed the universe or balloons or anything else)

the rate of the change in price is the first derivative of the graph of prices over time

prices are increasing so unless your income is increasing at the same rate then you are becoming poorer.

reduction in the rate of inflation simply means you are getting poorer somewhat more slower than previously; but poorer you are surely becoming

chucky

sabretoothtigger wrote: »

Thats what I think and the money will eventually go into circulation unless they reverse QE or raise rates to double digits

It is impressive they can keep inflation so low but I dont think its diminished at all just delayed and it'll arrive all at once.

I'm never convinced by this. All QE has done is swap one asset class for another to create liquidity. once/if the liquidity returns QE will be reversed, unless the Gilts expires first.

Graham_Devon

zappahey wrote: »

It can certainly be a factor in the decrease since, by definition, a decrease in the rate of inflation means that prices are rising more slowly but, while the rate is positive, they are still rising.

Exactly, I'm wondering what on exactly others think would lead to a decrease in the rate of inflation otherwise. Hence asking to explain. Alas, no explanation.

sabretoothtigger

chucky wrote: »

I'm never convinced by this. All QE has done is swap one asset class for another to create liquidity. once/if the liquidity returns QE will be reversed, unless the Gilts expires our first.

Its a swap with something that previously didnt exist.
The Gilt will return less money then inflation over its term, the difference in return is the amount of money placed into 'the economy' from out of nowhere.
The higher inflation goes and gilt prices drop the more of the original capital is never returned.

This is true until you reach the point in theory where all of the original purchase price is eroded to near zero worth and the interest given over the years is little compensation. No value is returned to the BOE or monetary base
Its far more stable then what Mugabe did but I think its similar in effect. The beneficiaries are those who buy the gilts lower before QE, sell before its price can drop back down and dont hold cash or anything effected by those who do


Yield on ten year debt in USA is 1.7 Japan is 0.8% and UK rate is similar to USA I think, we also hold their debt as security

nollag2006

Graham_Devon wrote: »

Exactly, I'm wondering what on exactly others think would lead to a decrease in the rate of inflation otherwise. Hence asking to explain. Alas, no explanation.

Sibley

Dont pain its all sorted.

Sky news now.

VAT and interest rates are being cut.