Worried about higher interest rates?

bigheadxx

I think that we have held off deflation for as long as possible but the reality is that we entered a deflationary period in around 2006. The main deflationary pressure of course being that baby boomer consumption peaked in around 2003. As the biggest part of the population entered the stage in life where they consume less and start to seriously plan for retirement, billions is taken out of the economy.


The UK kept the party going with lax credit, personal and government borrowing, benefits spending (tax credits) and immigration but all the signs were there that there was a huge deflationary spiral ahead which should have been met with post 2010 policies, but wasn't.


Again we will be lead to believe that the "symptom" of something else is the problem. But we have been following policies to tackle deflation for five years. No pay rises, no real wage growth, prioritising the deficit, immigration all mask the extent to which deflation has actually set it. How the general public monitor it, CPI will soon catch up and given that the fall in oil price will feed into the figures anytime soon, we could well see negative inflation by the end of the year.