MSE News: Largest inflation jump in two and a half years 13 November 2012 at 11:10AM in Budgeting & bank accounts 14 replies 2.3K views

Former_MSE_Helen

"The Retail Prices Index measure of the rise in the cost of living rose to 3.2% in October from 2.6% in September..."

Read the full story:

Largest inflation jump in two and a half years




This thread is not in the 'discuss house prices and economy board' as that is only open to those logged into the forum so anyone coming from the news story may not be able to see it.

pqrdef

No surprise, considering how the September figure was massaged down, for obvious reasons..

boongi

taken from the news story...

Rising inflation is likely to also fuel speculation the Bank of England will hold off from taking further action under its quantitative easing programme, which is the printing of money.

Official quantitative easing may be on hold but backdoor printing continues, and so inflation will accelerate :eek: ....
http://blogs.telegraph.co.uk/finance/jeremywarner/100021222/the-bank-of-england-has-just-crossed-the-line-into-straight-government-financing/

realaledrinker

I am struggling to understand how the increase in university fees - which are not repaid for several years - caused a hike in last month's inflation figures???

JimmyTheWig

realaledrinker wrote: »

I am struggling to understand how the increase in university fees - which are not repaid for several years - caused a hike in last month's inflation figures???

I guess you "pay" them now with a loan, then pay off the loan in several years time.

But I am struggling to understand why the increase in university fees, which has been known about for ages, has meant inflation has risen unexpectedly.

zagfles

pqrdef wrote: »

No surprise, considering how the September figure was massaged down, for obvious reasons..

Oh dear, get out the tin-foil hats!

The Sept 2011 CPI figure was the highest this century! Was that "massaged up" :rotfl:

LesU

zagfles wrote: »

Oh dear, get out the tin-foil hats!

The Sept 2011 CPI figure was the highest this century! Was that "massaged up" :rotfl:

So why did all of the energy companies choose to delay their large price increases until the month after September this year?

That was a lucky break for the government, pension funds etc etc.

Also, according to the BBC report, the SSE 9% increase in October wasn't included in October's inflation rate? Why not? Would it have made it too embarrassingly high?

zagfles

LesU wrote: »

So why did all of the energy companies choose to delay their large price increases until the month after September this year?

Because people use more energy in October?

That was a lucky break for the government, pension funds etc etc.

No it wasn't. It just means higher inflation in Sept 2013.

Also, according to the BBC report, the SSE 9% increase in October wasn't included in October's inflation rate? Why not? Would it have made it too embarrassingly high?

Probably because it was after the date they calculate the rate. Or the rises hadn't affected peoples' bill then. Anyway what difference does it make? It just delays the rise till the next month. Or is there some vested interest in keeping the October figure low as well :rotfl:

If you have some credible evidence that the inflation figures are fiddled, other than rantings of tin-foil hat wearing loonies, post it.

And answer the question as to why the Sept 2011 CPI was the highest this century if there are vested interests at work. I don't remember the loonies suggesting the figures were fiddled then...

CLAPTON

zagfles wrote: »

Oh dear, get out the tin-foil hats!

The Sept 2011 CPI figure was the highest this century! Was that "massaged up" :rotfl:

it's probably true that most months the CPI figure is the highest this century

Milarky

The point about 'one-off' changes (which is often not picked up by reporting) is by definition it is not repeated. This cuts both ways of course: when inflation appeared to 'dip' suddenly in May 2011 - at the very point when the first increase in rates since 2009 were widely expected to occur - the mpc chose to interpret that particular set of 'one month's figures' cautiously and did not begin to raise rates.

Think about it people - when the data is lumpy and you come across a lump (large change in a single month) do you base important decisions on just one piece of data - or do you look for a 'trend'*

*trends must take more than one month, by definition.

zagfles

Milarky wrote: »

The point about 'one-off' changes (which is often not picked up by reporting) is by definition it is not repeated. This cuts both ways of course: when inflation appeared to 'dip' suddenly in May 2011 - at the very point when the first increase in rates since 2009 were widely expected to occur - the mpc chose to interpret that particular set of 'one month's figures' cautiously and did not begin to raise rates.

Think about it people - when the data is lumpy and you come across a lump (large change in a single month) do you base important decisions on just one piece of data - or do you look for a 'trend'*

*trends must take more than one month, by definition.

But inflation figures (both RPI and CPI) don't just measure one month, they measure the change over the last 12 months. So a figure of 3.2% in Oct 2012 means prices have gone up 3.2% since Oct 2011. 2.6% in Sept 2012 means prices have gone up 2.6% since Sept 2011.

So any one-off increase in prices will remain in the figures for the next 12 months, so long term it makes no difference which month is chosen for any inflation-linked rise in benefits/pay/pension etc.